Monthly 84-6, Grade B

Another positive month for me, as the market rallies. I count 84 winners, 6 losers for this monthly option cycle. Market ran a bit too hot for me. I took some big losses on sold calls. Stupid loss on one Tesla leg, cost me big time. I sold a cheap option with high risk and suffered one of the biggest percentage losses ever, about 5500%. So the call buyer made about 55x their money. Most galling was that had I held until expiration, the option expired worthless.

The lesson isn’t to let it ride, because some other sold calls on NFLX and TSLA would have become even bigger losers had I not honored the mental stop loss levels and taken the hits.

Here are a few etfs that I track and their year-to-date performance:

IWM +10.1% Russell 2000 US small cap
SPY +4.2% S&P 500 US large cap

GLD -1.9% gold
SLV -2.4% silver

EEM -4.0% emerging markets equity
TLT -5.1% US 20-year treasuries

My trading account up 9.2%, which is good, not great. There is room for improvement. Last year’s big winner EEM is lagging this year. Gold and silver have been dead money for a while now. Bonds have trended lower. The cliché Sell in May hasn’t been working. I did lighten up a bit early in May. The strong rally had me rebalancing, and taking losses on some sold calls. Despite being wrong on the general market direction, I made close to 3% for the month. I’ll take that.

Going forward, the bull market is still intact. Far too many folks on Reddit, are far too cautious. Many in the fearful camp are relatively inexperienced folks being scared by click-bait type of articles, or focusing on one or two indicators. It isn’t all puppies and rainbows, but the preponderance of evidence favors a continued bull market.

I keep watching the yield curve. If all goes on schedule, the dreaded inverted yield curve will come into effect by late this year. This is a mild bear market indicator, so it doesn’t mean head for the hills. It may mean to lighten up and shift to a slightly bearish bias, from my slightly bullish bias.