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End of the Month Summary – September 2016

Monday, October 3, 2016 11:25
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My account had another good month as I clawed back a little more of my paper losses and edged back above $80,000 again. TLT (no surprise) was the biggest factor in my gains as my short shares fell in price (resulting in a gain for me) and most of my covered puts lost value (resulting in further gains for me). MDY and DIS lost some for me while IWM gained some.

I ended September with a Net Liquidation Value (NLV) of $80,348.45 and a Net Asset Value (NAV) of $80,599.60 according to Interactive Brokers (IB) after finishing August with an NLV of $77,777.76. The difference in month end values gave me a gain of $2,570.69 (~3.31%) on paper for September and a realized gain of $285.81 on only one closing trades. I received $68.85 in dividends from my IWM shares and paid $390.83 in short interest and dividends for my short TLT shares. The net total was a realized loss of $36.17 in September on top of the $2.44 I paid for the balance of my monthly minimum fee. Quicken reported that I have an account value of $80,550.16, the same as IB’s reported NAV after accounting for interest and dividend accruals of -$49.44.

I finally sold a covered call on some of my long shares, but only one call and it happened to be on the ETF that moved higher after the sale. I think I’ll break down and sell a call on DIS this week and maybe on MDY in the next decent day higher. I plan to roll my October TLT covered puts out and lower before expiration too.

If all of my naked puts were assigned, I would be 75.25% invested in this account. I am invested 3.77% percentage points less than I was at the end of August thanks to my account balance increase. This doesn’t completely represent my exposure because my TLT position skews my total risk. I had even more of an improvement from my risk of a margin call now compared to the past couple of months, but don’t see me changing much aside from possible covered calls and a FEZ naked put.

This is my asset allocation in my IB account as of the end of September:

  • Large-cap ETF: 0.0%
  • Mid-Cap ETFs: 35.13%
  • Small-Cap ETF: 30.92%
  • International: 0.0%
  • Individual Stocks & Other Sector ETFs: 11.56%
  • Bonds: -222.48% (not including my TLT options, just the short shares)
  • Short ETFs: 0.0%

According to Morningstar, here’s how I compare to the major indexes (including dividends) through the month’s last trading day, August 31, 2016:

  • Dow Jones Return: YTD change +7.21%, 1-year change +15.46%
  • S&P 500 Return: YTD change +7.84%, 1-year change +15.43%
  • NASDAQ Composite Return: YTD change +6.08%, 1-year change +14.97%
  • Russell 2000: YTD change +11.46%, 1-year change +15.47%
  • S&P Midcap 400: YTD change +12.40%, 1-year change +15.33%

These are my returns according to Quicken through September 30, 2016:

  • YTD Return: -16.62%
  • 1 Year Return: -5.58%
  • Average Annual (not cumulative) Return since November 18, 2009 (when I opened my IB account): +6.95%

The VIX ended the month at 13.29 and the VXN ended at 15.45. The VIX is 0.13 points lower than at the end of August and the VXN is 0.11 points higher than at the end of August. Both volatility measures ended the month below their mid-month highs and aren’t signaling much fear in the market.

The CBOE SKEW Index finished September at 124.58, 4.67 points lower than the end of August. I’m a little surprised the SKEW is this low with just over a month to go before the election. I expect the SKEW to go up some by the end of this month. The high for the past month was on September 12, when it hit 134.18.


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