Month End Summary – October 2018

October was anything but fun to be a bull in this market. Luckily, we had a great rally in the final two days and most of my biggest holdings got a nice bounce, especially yesterday when FB, AAPL, and GS all moved sharply higher. While I took a beating on the full month, it would’ve been worse without the $3,700.30 gain in the final two days of the month. By the end of the month, the Dow Jones Industrial Average lost 5.07% and the S&P 500 lost 6.94%, worse than my results, but I still have ground to make up for from missed gains earlier in the year.

My account ended October with a Net Asset Value (NAV) of $98,574.95 according to Interactive Brokers (IB) after ending September with a NAV of $102,133.62. I had a loss of $3,558.67 (~3.48%) on paper for October and had $922.76 in net realized gain from my four closing trades on an AAPL naked put that expired worthless, a FB covered call that expired worthless, an IWM naked put that was assigned, and an XLF naked put that was assigned. The assigned puts didn’t give me a realized gain since I rolled the profit into the cost of the stock shares to reduce the price per share. It’ll come out when I sell the shares.

I received $58.96 in interest ($13.87 less than last month) and no dividends. Quicken reported that I have an account value of $98,548.87, which is a penny more than what IB shows due to rounding difference errors and the $26.09 in interest accruals IB is crediting for me.

I’m 117.05% invested in this account, 25.25 percentage points above the end of September. Four of my options are set to expire in November. My ADI $92.50 naked put is in the money and my three covered calls (FB $175, GS $240, and FEZ $39) are out of the money. I’m debating selling some new calls before these expire. I might start on it tomorrow, but I will probably wait until next week to see if we can get some more upside price movement before I cap my potential growth.

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

– Large-cap ETF: 0.0%
– Mid-Cap ETFs: 0.0%
– Small-Cap ETF: 15.22%
– International: 3.56%
– Individual Stocks & Other Sector ETFs: 80.23% (most of this is large cap really with AAPL, ADI, FB, GS included here)
– Bonds: 0.0%
– Short ETFs: 0.0%

According to Morningstar, here’s how I compare to the major indexes (including dividends) through the last trading day, October 31 2018:

– Dow Jones: YTD change +3.41%, 12-month change +9.87%
– S&P 500: YTD change +3.01%, 12-month change +7.35%
– NASDAQ Composite: YTD change +5.83%, 12-month change +8.59%
– Russell 2000: YTD change -0.92%, 12-month change +2.34%
– S&P Midcap 400: YTD change -2.77%, 12-month change +1.02%

These are my returns according to Quicken through the end of October 2018:

– YTD Return: -1.43% (not annualized)
– 1 Year Return: -0.66%

The VIX ended the month at 21.23 and the VXN ended at 29.12. The VIX finished October 11.76 points higher than the end of September. The VXN finished 12.56 points higher. The VIX peaked on October 11, when it hit an intraday high of 28.84. The VXN peaked the same day at 20.51. These ending levels are close to the lows seen since mid-January, not too far from where they’ve traded most of the year with a few exceptions that pushed levels a little higher since February’s peaks. Last month I noted the ending levels were close to the lows seen in mid-January, and once again, the VIX/VXN foreshadowed weaker time to come. Now that volatility to the downside has eased a good bit, I’m wondering if the coast is clear. I’d like to add more while volatility is high, but since I’m already over-invested, I might wait for a few more confirmation days before I jump in deeper. I’ve thought about selling an SSO call spread or even an SSO naked put far out of the money, but I’m not quite ready to accept that much risk yet.