End of Month Summary – March 2013

I had a nice recovery in March, mainly due to the turn around in oil and my heavy position in UCO, the leveraged oil ETF.  Other positions helped through time value decay on my naked puts, but UCO is what I’m living and dying by lately.  I’ll be ready to unload my UCO holdings if my shares are called away a couple of bucks higher.  I need a smaller allocation in the volatile commodity and will have more cash to allocate to “regular” equities.  For March, I’m happy I had this position and hope to see continued gains, even as the dollar strengthens.  By the end of the month, I’m back ahead of January’s closing account value and not too far from my intra-month high above $109,000.

I ended March with a Net Liquidation Balance (NLB) of $107,702.78 and a Net Asset Value (NAV) of $107,703.97 according to Interactive Brokers after finishing February with an NLB of $104,785.16.  That gave me a gain of $2,917.62 (~2.78%) on paper for March and a realized gain for the month of $1,315.55.  I received $50 in dividends in March (from QCOM).  Quicken reported that I have $107,475.97, $228.00 less than my actual NAV reported by IB.  I went through Quicken and updated the mark-to-market prices on every position I have and am not sure where I’m missing $228.00 since all of my positions match in Quicken and IB.  I even added the missing $2.84 to my Quicken cash balance on of 3/1/13.  I think this has added up over the months from different rounding amounts or a single missed interest payment.  Either way, I’ve included the difference in my March reconciliation.  I expect the $228.00 difference will work itself out in the next month or two as my positions rotate into new holdings.

At the end of the first fourth of the year, I’m about half of the way to my end of the year goal of gaining 15% for the year.  I only need to gain about 0.56% per month to reach my goal.  That’s very attainable without risking too much.  If my 600 UCO shares get called away, I’ll only have another ~$5,500 to make up through my other positions.  That’s very doable, especially if we can get a pull back of 4-5% soon that lets me be more aggressive with higher volatility helping the premium prices.  I don’t plan on chasing AAPL again any time soon.  I’ve proven to myself that my timing of the stock leaves a lot to be desired.  I’ll re-open my QCOM position after it expires (or I could roll it sooner).  DIS still looks promising as a repeated position too.  I’m keeping an eye out for some more solid companies and will continue to use index ETFs as the majority of my holdings to avoid one-off catastrophes as much as possible.

If all of my naked puts were assigned, my spreads all lost 100% and my covered calls expired worthless, I would be 97.43% invested in this account.  That’s up nearly 20% from the end of last month and I hope to increase that soon, if the markets cooperate with my plans.  Like I mentioned last month, I’m still not heavily invested enough for a continued climb for stocks.  I’ve thought about buying some calls to take advantage of the low volatility, but keep waiting for a mini-correction.  I might just have to buy shares and couple it with long puts.  It’s essentially the same, but don’t have to worry about timing my exit on a short-term spike in prices.  That’s not a typical trade for me, so I could simply go back to another put spread with limited upside and limited downside.

I still only have one contract set to expire in May.  I’d like to build on that, but with volatility so low, I’m considering going farther out on the calendar rather than closer in, just to find some premium worth selling.  Then again, I thought my March allocation was small and I ended up with more than $1,300 in realized gains through the month.  I have no allocation for small or mid-cap ETFs.  That’s going to need to change soon.  I might go with some far out of the money leveraged ETFs to fill that void.

I was somewhat surprised when I saw my 1-year performance compared to the indexes.  Since I knew I was trailing some for the year-t0-date, I thought my full year would suffer more.  I was happy to see I’m ahead of the Dow Jones, S&P 500 and NASDAQ for the past year.  I have some catching up to do for this calendar year, but there’s plenty of time remaining and if I hit my 15%, I won’t be too upset if the indexes beat me by a few points.

This is my asset allocation in my IB account as of the end of March, including hedges, but not factoring in covered calls that are in-the-money:

These are my returns according to Quicken through 3/28/13:

• YTD return: +7.61%
• 1 year return: +14.03%
• Annualized returns since November 18, 2009 (when I opened my IB account): +5.55%