August wasn’t a good month for my account, but not too bad either. I lost money, so it wasn’t good. I didn’t lose much, so it wasn’t too bad. Half of my losses came from my naked TLT calls that expire in October and the part that hurts is I could’ve taken a $400 profit within two days. The next day, I placed an order to buy my calls back and TLT has moved against me since then. If the calls expired today, I’d have a loss, even without the time value remaining, but I think they’ll work out for me before I’m out of the trade.
My account ended August with a Net Asset Value (NAV) of $91,851.89 according to Interactive Brokers (IB) after ending July with a NAV of $93,287.57. I had a loss of $1,435.68 (~1.54%) on paper for August (less than the S&P 500’s 1.81% loss for the month and the Dow’s 1.72% loss). I had $297.79 in net realized gains, which includes my one closing trade on a QQQ covered call, $70.47 in interest and no dividends. I also paid $8.59 for the monthly fee minimum. Interactive Brokers charges $10 each month as a minimum for trading fees on accounts that have less than $100,000.
Quicken reported that I have an account value of $91,795.16, which is the same as what IB shows after I add in the $656.73 in interest accruals that IB credits in advance of the actual payment.
I’m 96.74% invested in this account as of the end of the month, 1.16 percentage points below the end of July. I have $2,993.92 left in uninvested cash. I have four different option contracts set to expire in September – one IWM covered call that’s far out of the money, one QQQ covered call that’s out of the money, one QQQ naked put that’s in the money, and one MDY naked put that’s in the money. The total time (extrinsic) value left in these contracts is only a little more than $450, but I could gain a decent bit more on the intrinsic value if the ETFs move higher before expiration.
This is my asset allocation in my IB account as of the end of August:
- Large-cap ETF: 41.36% (including QQQ)
- Mid-Cap ETFs: 38.65%
- Small-Cap ETF: 16.25%
- International: 3.99%
- Individual Stocks & Other Sector ETFs: 0.0%
- Bonds: 0.0% (Not listing my TLT short calls until assigned)
According to Morningstar, here’s how I compare to the major indexes (including dividends) through the last trading day, August 30, 2019:
- Dow Jones: YTD change +15.14%, 12-month change +4.12%
- S&P 500: YTD change +18.34%, 12-month change +2.92%
- NASDAQ Composite: YTD change +20.01%, 12-month change -1.81%
- Russell 2000: YTD change +11.85%, 12-month change -12.89%
- S&P Midcap 400: YTD change +14.37%, 12-month change -6.43%
My return according to Quicken through August 30, 2019:
- YTD Return: +9.86% (not annualized)
- 1 Year Return: -11.42%
The VIX ended the month at 18.98 and the VXN ended at 22.39. The VIX finished August 2.86 points higher than the end of July. The VXN finished 3.61 points higher. The VIX peaked on August 5, when it hit an intraday high of 24.81. The VXN peaked on the same day at 28.30. These volatility levels are decent levels to sell options if you think the lows are already in. Today’s price action is showing us that we should expect continued volatility for a while. Since I’m essentially fully invested, I’m planning to keep watching and possibly double up when I see what appears to be solid footing. However, I’m not sure I’ll be comfortable for the next year of turmoil as China trade works its way out and we face election uncertainty again.