SPY to break even for the year, Grade B-

SPY is now break even for the year. I have a positive month, up nearly 5%, self grade Grade B-. My come back from my devasting March loss continues. For the year, it is still a dismal -46% for me (a -67% loss was max drawdown).

Here is the year to date ETF tracking

TLT 23.1% US 20 year bonds
QQQ 22.0% Nasdaq 100, mostly tech 
GLD 19.0% gold

SLV 12.3% silver
SPY 0.0% S&P500 US large cap

EEM -4.7% Emerging markets equity
IWM -11.7% Russell 2000 US small cap

QQQ continues to roar ahead, despite a minor correction this past week. Silver running higher. SPY to break even, my account -46% ytd, as already noted.

The parabolic rise in some stocks such as TSLA AAPL AMZN had me covering sold calls for big losses.

I continue to keep a lot of dry powder on hand, with 60% buying power in reserve at most times. There feels like a disconnect between Main Street and Wall Street. Maybe Wall Street is looking past the immediate numbers.

Positive, but lagging, grade C

A positive month for the June option cycle, but that big 6% down day hit hard. I was up about 3% for the month, but this lags the approximately 7% gain in SPY, 9% in QQQ. My severe March losses still dominate the year and I am at -48% for calendar 2020. QQQ is now up nicely for the year, and SPY is only down 3% or so. Again, that’s what tends to happen after a severe drawdown.

ETF summary, year-to-date numbers:

TLT +19.9% US 20 year Treasury bond etf
QQQ +14.9% Nasdaq100 US mostly tech
GLD +14.8% gold

SLV +2.8% silver
SPY -4.1% S&P500 US large cap

EEM -11.0% Emerging market equity
IWM -24.6% Russell 2000 US small cap

Again I sit at a dismal -48% because of the -67% margin call month in March. I continue to sell naked strangles, with low capital utilization (high cash reserves). With the extended rally then the big down day, I was overly cautious and lagged buy and hold for the June option cycle. That’s the bad news. The good news, is that I was positive for the third month in a row.

Wall Street is looking ahead. Main Street is only starting to recover from the quarantine, while broad market indexes are close to recovering all losses for 2020. Businesses are just starting to open up. As always predications are mostly for entertainment, especially when there remains a great deal of uncertainty in the economy and society.

Lucky 8, grade B

Another up month, up about 8% for the May option cycle. My self-grade for the month is B. I am still down more than 50% for the year. That’s the unfortunate math of suffering a large loss. It takes a 200% gain to recover from a 67% account loss. Eight is considered a lucky number by many Chinese. Two up 8 percent months in a row are welcome.

Here are some etfs 2020 year-to-date:

TLT +23.1% US 20 year treasuries
GLD +14.7% gold
QQQ +5.0% Nasdaq100 mostly US tech stocks

SLV -3.3% silver
SPY -11.1% SP500 US large cap stocks

EEM -19.7% Emerging market equities
IWM -24.6% Russell 2000 US small cap stocks

My account down about 50% for the year because of the March losses.

Notable is the QQQ is now up for the year. SPY was about flat for March. Emerging market stocks and US small cap stocks still down for the year. Gold and long term treasury bonds continue to lead for the year.

Baby Steps, Grade C

Under normal conditions an 8% gain is a decent month. However, compared to the over 25% gain in SPY though, it looks poor. Factor in the -60% from last month, and I see it as a baby step forward. Grade is a gentleman’s C.

After going mostly to cash near the bottom, I was cautious getting back in. The US stock market experienced a monster rally off the lows. QQQ is now up for calendar 2020, SPY down about 11%.

Here are the year-to-date etf numbers:

TLT +23.9% US 20 year treasuries
GLD +11.0% gold
QQQ +1.3% Nasdaq100 mostly tech stocks

SPY -10.9% S&P500 US Large cap
SLV -11.8% silver

EEM -19.2% emerging market equity
IWM -26.5% Russell 2000 US small cap

My trading account down about 60% year to date. I move forward. Like the title says baby steps.

COVID-19 bear, margin call, Grade F

The Corona virus set off a market cascade. My losses are approximately 67% from recent highs. At the end, I moved mostly to cash. After transferring cash in to meet the margin call, I don’t want to chance another margin call for now. My account survived, just barely. One or two more really bad days and the pit would have been too deep.

Like many, I was slow to recognize how the decline would cascade on itself. Like some, I got caught in some of the sharp bear market rallies.

Some blue chip stocks saw huge losses. I remember when Boeing was over $400. Now under $100. Citi C saw a 50% drop to under $40. The S&P500, SPY is down approximately 27% for year.

I plan to scale back on my market activity. I definitely need to regroup, clear my head, after the two-thirds account haircut. I obeyed my rule number one, but just barely:

LIVE TO TRADE ANOTHER DAY.

It is easy to rationalize or give excuses, but the bottom line a bleak -67% for 2020. This compares to a 27% drop in SPY. I met the margin call, and still have my account, If I were more of a risk taker, or more stubborn in terms of taking losses, my account would likely have been liquidated. There were many near bottomless pits for naked option sellers like me. Personally, there are too many losers to note. Tesla was the biggest, accounting for about 20% of all the losses, first on the way up, and then on the way down.

Surviving is a small accomplishment during these scary times. I’ll keep updating the blog every month, after the third Friday option expiration. The reports may by scaled back, because with the smaller account, there will be less trading, possibly a lot less. That’s it for now, stay healthy, be grateful for all blessings, even the small ones.

Telsa moonshot leads to losses, Grade C-

I apologize for the late post. I have been feeling under the weather. The parabolic rally in TSLA resulted in large losses. I was short strangles (both puts and calls) and covered some of the calls for epic losses. Overall, I was down 1.8% for the month (this is back to Sunday). Overall, the my self-grade is C-.

Here are some etfs ytd for 2020:

TLT +9.3% US 20 year treasury bonds
QQQ +8.3% Nasdaq100 US tech

GLD +8.3% gold
SLV +7.7% silver

SPY +3.6% S&P 500 US large cap
IWM +1.3% Russell 2000 US small cap
EEM -3.2% emerging markets equity

My account -1.8%, with about a 6% from Tesla positions. Thankfully, I am not a stubborn person, because drawing a line in the sand in front of a parabola, is the recipe to ruin. Live to trade another day, that is Rule #1.

This morning Corona Virus fears have sent the stock mar\ket tumbling, so I have more losses not included in the numbers above, but will writ about them next month. 

Thanks for reading. Stay healthy.

Markets shoot higher, Grade C-

US stocks bolt out of the gate in January, with QQQ up over 5%. Me, I shoot myself in the foot, up a mere 1.2%. The culprits are Apple and Tesla running way too hot. I took big losses on sold TSLA calls.

Still, I am up for the month. Self-grade is C-. Could have been a lot worse, had I stayed in the way of the runaway train. Of course, leveraged longs on those hot stocks made a ton.

I’ll regroup and reassess my stance. I expected a modest decline, due to delayed selling to book gains in the new year, and pay tax in April 2021.

Overall Internet chatter remains mixed. There seem to be more people convinced that leveraged long is a no-lose strategy. More people that had a good 2019 and want to trade for living. On the other side, there also seem to be more regular folks that are raising cash, or moving all to cash. 

I remain cautiously bullish. Too cautious so far, but the year is young yet.

I posted a lengthy year-end recap on Reddit. For those that missed it, here is the link

Blockbuster year Grade A

Stock markets boom in 2019. Bonds, gold also do well. My trading account up about 55%, grade A. The backdrop is up 28% for SPY, but 55% is beyond my expectations.

For new readers, what I mostly do is sell naked strangles way out of the money. I have mostly leaned bullish this year. When adjustments are needed, I may buy at the money options to get back to the desired delta.

That’s probably the biggest change from two years ago, buying the at the money options on gap moves that threaten the position. For small adjustments, I sell additional layers. I still tend to take losses if the strike price is breached. After I got up 30% for 2019, I became more conservative. Even so, I was able to keep up with the bulls.

I often say predictions are for entertainment. The overall tenor of the market seems muted to me, for such a big up year. There is still not much public stock market chatter where I am and online. There are a few signs of heat, such as people bragging about big gains, thinking about trading full time after a lucky streak. Right now, there isn’t a fever pitch that might follow such a big up year.
Me? I remain cautious. I took out some money to pay the substantial tax bill that is coming.

50 burger, Grade A-

Boom boom bing. The rally rolls on I gain about 5%, now up 53% for the year. Grade for this trading month is another A-.

ETFs year-to-date, best to worst:
QQQ +37.2
SPY +28.3%

IWM +24.0%
EEM +14.2%
TLT +12.5%

GLD +15.1%
SLV +10.5%

Equities top the list. All these asset classes are having a good year. Again, my trading account is up 53%, so it is happy time.

I feel like I have been relatively conservatively positioned for a while now, with a lot of dry powder. When making adjustments I sometimes buy at the money options. For example, if I am short a batch of 10 delta calls on SPY, and SPY rallies. I might buy atm call(s) to rebalance to delta neutral, turning the overall position into a ratio spread (long the atm, short multiple otm options).

It is a time to reflect, to hopefully take in the lessons from this bull year in stocks. One big lesson is not to listen to Chicken Little. Yes, corrections and even crashes are inevitable, but rarely occur when large numbers of novice and amateurs are out of the market. Much more common at tops is novices writing about how leveraged long is the smart play, and believing it.

Merry Christmas to all. I’ll post a year end wrap up soon.

Monthly:Stocks surge ahead, Grade A-

Stock surge to record highs for most major indices. SPY is now up almost 25% for the year. Earlier this year, more than few moved to sidelines after the market was up 12% or 15%, thinking it was a good year. I researched it and during the last thirty years, there was about a 25% chance of a 25% gain or better. Yes, there are years like 2018 when a nice gain goes south.

As for me, I am amazed at my 46% up year. Grade is A- with over a 4% gain for the November option cycle. More than a few stocks ran too hot and I covered many of the call sides of sold strangles for a loss. Some were rather big losses. AAPL DIS ROKU TSLA were among those that ran too hot as well as QQQ and SPY.

For the year, AMZN TSLA continue to be the lead winner tickers, BA and now ROKU the big losers. I made some small winning plays in BYND DB and a dozen others. I am out of AMZN for now, not wanting to push my luck. If anything, I’ve been too cautious, but up 4% in a month is not bad.

Here are some etfs I track, ytd for 2019:

QQQ +31.5% Nasdaq 100, mostly US tech stocks
SPY +24.8% S&P 500 US big cap
IWM +18.7% Russell 2000 US small cap

GLD +14.0% gold
TLT +13.4% US 20-year treasuries

EEM +10.4% Emerging markets equity1
SLV +9.2% silver

dividends are not included

Everything is up. I often ask, would a person take a certain percentage gain at the beginning of the year and sit it out. Most market participants would gladly sign up for +9% if guaranteed. Again, I am up about 46% for 2019. Yippee! By far my best year in many moons.

I continue to be cautiously optimistic, slight delta positive on sold strangles. I have a lot of dry powder, especially after the third week option expiration. I am recovering from a lingering cough, and extremely busy with other activities, so my time and energy for trading continue to be limited.

The North 40, Grade B+

This trading month, impeachment news sent the market lower for a few days. The market came back on strong earnings. Some bad news from Boeing and Johnson and Johnson made for a muddy closing Friday.

For this option cycle, I was up about 2.8%. Up about 40% for calendar 2019. Yippee! Best year in recent memory for me.

As readers know this is not a small play money account where 100% monthly returns, or 80% drawdowns occur. Especially the last few months, I have moved more money into cash reserves (BSV Vanguard Short Term Bond).

Here are a few ETFs that I track, year to date, dividends not included:

QQQ +24.3% Nasdaq 100 US tech focused
SPY +19.2% S&P 500 US large cap

GLD +15.9% gold
TLT +14.9% US 20 year treasuries
IWM +14.0% Russell 2000 US small cap

SLV +13.0% silver
EEM +7.5% Emerging markets equities

US stocks leading an up year for all the ETFs. This is a marked change from 2018, when money market funds were the best performing asset class. Bonds gave back a little this month, as tech stocks rebounded in a big way. Again, my account up 40% for 2019, so I am having a banner year.

Going forward, I don’t have any great insights. I will keep doing what I am doing, it is working. I am selling way out of the money options, with a slight bullish tilt. As adjustments need to be made, I add layers, sometimes roll up, roll down, sometimes on gaps buy calls or puts. If strike prices are crossed, I tend to close or roll.

The year is not over yet. However, way too many public and private pundits are playing it cautious so a replay of 2018’s late year tumble seems unlikely. What might frustrate the most market participants is a decent rally into new highs. As always predictions

Weekly: Impeachment

Just when I thought the market rally was going to continue, impeachment news sinks the market.

I lose a bit more than 1% for the week. As I have been saying, I am relatively cautious.

Monthly: lowering risk, grade A

I am on the road and forgot to bring exact figures. I believe I am up 4 to 5 percent for this option cycle, my self grade is A. Now up about 35 percent for 2019. That’s good.

A few etfs ytd, not counting dividends

QQQ +25.6 US tech stocks Nasdaq 100
SPY +21.6 US large cap S&P 500

TLT +18.1 US 20 year Treasury bonds
IWM +16.9 US small cap Russell 2000

GLD +16.8 gold
SLV +14.4 silver
EEM +6.9 emerging market equities

Again, my account up about 35 percent. Yippee. I lowered my risk by moving more money into BSV Vanguard short term bond etf. I took a loss on some ROKU options. The chart formation looks like a parabola, now into the waterfall decline stage.

AMZN and TSLA continue to be my most profitable tickers this year. BA continues to be the worst. DIS has been disappointing. Some small plays in SHAK SHW produce small profits.

Because I am on the road, because last year turned nasty, because I will have less time for the markets, I am reducing risk. I’m still in, but playing smaller.

Weekly: Hot Apple

Apple was all over the place this week, lower then higher, then lower. Overall, AAPL ran too hot and I covered layers of calls for minor losses. Overall, the market continued to climb higher. My account is near all time highs, with a modest gain. Bonds and gold had a sharp correction.

I continue to be cautious. I move more money into BSV Vanguard’s short term bond etf. Last year’s experience, where a decent gain for 2018, turned into a loss, is influence. Of course, more than a few people may feel the same, so an up market is more likely. I’ll be traveling for a bit, so updates may be even shorter, even more spotty.

I am likely going to change to monthly updates, because blog readership is down. It’s not as if I have a lot of exciting to say. Many people are looking for trade ideas, and most of my trades are not appropriate for beginners. My track record isn’t anything to brag about, even if 2019 has been a very good year for me.

Weekly: bears scurry for cover

A Tuesday dip is followed by a decent rally. Bearish traders take cover. I rolled down on the Tuesday decline and bought some QQQ and SPY calls to rebalance to slightly bullish as the market rallies. It is half a loaf to be sure, but I still finish the week with over a 2% gain. This despite a neutral then bearish stance on many underlyings. 

I reinitiate a small position on LULU post earnings. I roll up on AMZN and many others. I am close to all time highs as is the market.

Weekly: bounce back rally

Market rally, up about 3% for the week. I was caught net short on Monday, quickly reversing to net long. I end the week, up about 3% just like the market. One new long was selling puts on BURL Burlington Coat Factory. I added to longs in COST Costco, TGT Target, and some others. Retail is chock full of winners and losers. I will look at beaten down stocks such as M Macys in December when tax selling peaks.

Marketwatch.com has a feature article about September being the worst month. However, down 1 percent is the average loss, which is close to nothing. I deployed a bit of buying power this past week, but still have a healthy reserve. For SPY the main position is a ratio spread, long the atm calls, short multiples of the 10 delta otm calls. For the U.S. readers, have a nice long weekend. 

Weekly:Shelter from the storm

I keep taking losses or rolling down to reach my target deltas. I lose about 2.5% this week. It is a bumpy ride. Just when I thought it was safe to go back in the water, the Jaws shark music started up again. I had some small winners, post earnings in Target TGT, pre earnings in Nordstroms JWN. Positive news from Boeing BA, had me covering calls for big losses. Reduced my risk on AMZN, at a big cost.

Friday opened higher, then round 27 of tariff wars triggered a massive sell off. I took my lumps through out the day. Just before the close I bought puts on SPY and QQQ, near the worst possible levels. So I ended the day net short QQQ SPY. We will see what next week brings. Damned if I know.

Monthly: Going Down, Grade C

A tough month, most equity markets moved lower. Bonds rocketed higher. I ended with a modest loss of 2.7% or so for the month. Grade is a “gentleman’s C.” Not good, but respectable given the difficult markets. Most of my earnings plays did mediocre to poor. Deere came in okay, but so many others, such as AMZN DIS TSLA, were losers on earnings day. AMZN and TSLA remain my big winners for 2019. BA remains the worst loser. I had some small post earning positiongs in SHAK SHW CMG SWK.

For the week, a big 800 point Dow drop, was made better by an up Friday. I ended the week with a modest gain. On Friday, Deere earnings weren’t great, but the stock moved higher. 

This month saw big changes in the ETF standings for 2019. Bonds and gold move up. Small caps and emerging markets move down. SPY still holding a respectable +15.6% ytd, but down over 3% for the trading month. Same with my trading account, down 2.7% or so. 

2019 year to date (not including dividends)
TLT +20.3% US 20 year treasury bonds
QQQ +20.2% Nasdaq 100, tech dominated equities
GLD +17.8% godl

SPY +15.6 S&P500 US large cap stocks
IWM +11.0 Russell 2000, US small cap stocks

SLV +10.3% silver
EEM +1.2% emerging market equities

My account up 30% for 2019, so I am holding my own, even with the modest loss this trading month. I wish the way forward were clear, but it is cloudy. The bear case remains substantial, but the market remains relatively resilient. If the market was going to crash, this week had the ingredients for a crash. I regret mostly missing the huge move up in bonds and gold, but up 30% for 2019 is good, if not great.

Friday’s big rally has me net short on AMZN and SHOP. Most others I am neutral or net long still. I can and will adjust as needed. I am staying with what I see as a conservative course, with significant reserves.

Weekly: Wild week

It is a wild week in the markets. A manic Monday, timid Tuesday, wild Wednesday, torrid Thursday, capped by a fade on Friday. Major indices finish the week mildly lower. I eek out a small gain for week. 

This past week, Disney earnings were meh. I lose a modest amount. Some other pre or post earnings plays include SHAK SHOP SWK UBER. I take a loss on SWK Stanley Toolworks. UBER comes in with a mild disappointment, but I sold strangles far enough out of the money to profit.

It hasn’t been an easy market. I continue to be cautious. Next up is earnings for Deere, I am leaning bullish going into the event.

Weekly: Powell Trump punch

A one two punch sends markets lower. I have a bad week, losing more than 4%. I close some positions near the lows on Friday. It is painful, but it is what I do. I close and take losses to reduce my risk profile going forward. We will see what comes next.