Even with the S&P 500 finishing November almost dead flat, I had another great month. General time decay on my options, especially on TLT, helped my account do so well in addition to small and mid-cap stocks outperforming larger stocks. I’m up over 18% for the year and have to start planning to lighten up on some exposure for my annual profit taking and resetting to $100,000 in this account. However, I don’t want to cut any positions too soon with a possible Santa rally coming over the next few weeks.
I ended November with a Net Liquidation Value (NLV) of $118,231.16 and a Net Asset Value (NAV) of $118,080.88 according to Interactive Brokers (IB) after finishing October with an NLV of $115,009.78. That gave me a gain of $3,221.38 (~0.028%) on paper for November and a realized gain for the month of $2,120.13 on six closing trades (including two option assignments). The realized gain came from 10 TLT November $125 naked calls, one DIS covered call assignment and forced sale of 100 shares (this $200.99 net gain includes the premium from original put assignment), one DIS November $100 put that expired worthless, three IWM November $118 covered calls that expired worthless, and two FEZ puts that were assigned (these put premiums will be used to lower my cost per share and didn’t create a realized gain in November). I received no dividends from my holdings in November. Quicken reported that I have an account value of $118,080.89, a penny more than IB shows, the same as last month. I’m leaving it until the end of December to give it one more month to clear up and then I’ll make an adjustment if needed.
I have three options set to expire in December – 10 TLT naked calls, one SPY covered call and one MDY covered call. I expect my TLT naked calls to expire worthless or that I’ll close them early for a few bucks. My SPY covered call is in the money and I think it’ll be assigned. My MDY covered call was nearly $4.00 out of the money at the end of November, but the shares are up $2.00 as I write this, leaving only 0.5% to climb to force an assignment. If I exit SPY and MDY, I’ll have a good bit of new cash to put to work, even after withdrawing my profits for 2015.
If all of my naked puts were assigned, I would be 116.67% invested in this account. I am invested 11.6 percentage points lower than I was at the end of October. Some of this drop came from my account balance increase, but I also sold 100 shares of DIS that I didn’t replace. I still have an IWM January naked put that’s more than 8% out of the money and a SPY March naked put that’s 7% out of the money. I’m not worried about either of these being assigned and might close them in December to roll both to higher strikes.
This is my asset allocation in my IB account as of the end of November:
- Large-cap ETF: 34.14%
- Mid-Cap ETFs: 22.52%
- Small-Cap ETF: 48.83%
- International: 6.28%
- Individual Stocks & Other Sector ETFs: 9.73%
- Bonds: 0.0% (not including my TLT naked calls)
- Short ETFs: 0.0%
These are my returns according to Quicken through November 30, 2015:
- YTD Return: +19.24%
- 1 Year Return: +19.64%
- Average Annual (not cumulative) Return since November 18, 2009 (when I opened my IB account): +9.74%
According to Morningstar, here’s how I compare to the major indexes (including dividends) through the month’s last trading day, November 30, 2015:
- Dow Jones Return: YTD change +1.76%, 1 year change +1.87%
- S&P 500 Return: YTD change +3.01%, 1 year change +2.75%
- NASDAQ Composite Return: YTD change +7.87%, 1 year change +6.62%
- Russell 2000: YTD change +0.64%, 1 year change +3.51%
- S&P Midcap 400: YTD change +2.08%, 1 year change +2.92%
The VIX ended the month at 16.13 and the VXN ended at 18.10. These readings are two points and less than one point above last month’s closing levels. The VIX made it to 20.67 and the VXN made it to 21.47 late in the first half of November, but the jump higher was only for a day and volatility settled down again. Having the VIX and VXN in the mid to upper teens allows for reasonable option premiums and indicates that investors are overly not worried or complacent.
The CBOE SKEW Index finished November at 127.25, 1.48 points above the end of October and 12 points below its peak at 139+ a few times.