I finished June with a combined balance of $102,037.08 ($90,788.28 in IB and $11,218.80 in AMTD). As always, Quicken is showing a slightly different total balance of $102.188.35. I ended May with a balance of $105,869.10 which means I was down $3,832.02 on paper in June. Although I lost on paper, I finished June with a realized gain of $1,785.82. That’s completely because I only sold one of my losing stocks and that loss was cut in half by the option premium gain on the same stock. Although I lost 3.6% in June at least my investing model kept me from losing as much as the S&P 500’s loss of nearly 5.5% for the month.
I’d be 128% invested if every naked put I have open is assigned, but I’m still out of the money with a handful of those, so if today was options expiration day for all of them I’d have more than enough cash to cover them all. That keeps me from being stressed out as the correction continues to melt away stocks’ value. It also keeps me from going on a new put options selling spree. I have enough invested to help me make a decent return in a rally. If the decline continues I’ll be set up to buy in at some relatively low prices on some quality names. I might end up going on margin if the decline continues long enough, but with IB’s low margin rates I think it’ll be worth the risk in what I can gain through selling options. That might force my hand into selling covered calls either at the money or even in the money.
These are my returns according to Quicken:
My 1 year return: +2.07%
Year to date (YTD): -4.72%
Annualized returns since 4/8/07 (my blog’s beginning): -11.78%
Deposits for month: None
According to Morningstar, here’s how I compare to the major indices through 6/30/10:
Dow Jones Return: 1 year +18.94%, YTD -5.00%
S&P 500 Return: 1 year +14.43%, YTD -6.65%
NASDAQ Composite Return: 1 year +14.94%, YTD -7.05%
Russell 2000: 1 year +21.48%, YTD +1.95%
S&P Midcap 400: 1 year +24.93%, YTD +1.36%
The VIX ended the month at 34.53 and the VXN ended at 35.16. That’s well up from where volatility has been averaging for the past year and more than double the April lows, but still below the May highs. The higher volatility certainly helps increase premium prices, but the increase in up front reward might not quite be worth the risk down the road. I have a limit order on VXX (iPath S&P 500 VIX Short-Term Futures ETN) for when it gets back into the low 20s one day. I see it as a good hedge for volatility spikes and wish I had thought of this while it was trading in the teens in April since it’s over 31 now. VXX is optionable, so I might even go that route with some naked puts around $23-25 later on.