Month End Summary – February 2019

Like most bulls, I had a nice gain in February. I would’ve made much more if I had been fully invested and if my covered calls didn’t move in the money on a few of my positions. Still, I gained back some of my lost ground and that’s a good thing. I stuck to my plan of using out of the money covered calls on my positions, but I didn’t have enough positions for the cash I had available and that caused me to miss out.

My account ended February with a Net Asset Value (NAV) of $89,304.93 according to Interactive Brokers (IB) after ending January with a NAV of $87,697.00. I had a gain of $1,625.93 (~1.85%) on paper for February (trailing the Dow’s 3.67% gain and the S&P 500’s 2.97% in February. I had $3,544.07 in net realized losses from my six closing trades (AAPL, ADI, and XLB covered calls and the underlying shares for each). This total includes $146 in dividends from AAPL and $10.83 in interest payments in February. Quicken reported that I have an account value of $89,282.92, which is a penny more than what IB shows after I add in the $22.02 in interest accruals. Per usual, I’m going to wait another month or two to see if the rounding error fixes itself.

I’m 83.97% invested in this account, 4.98 percentage points above the end of January. I have $14,315.58 and that’s after my trade on MDY yesterday that accounted for $34,300 of my sideline cash. I really ran through February with much less at risk. I have two options remaining that expire in March. One is my one XLF March $26 covered call that’s already in the money by $1.67. It has ~$.11 in time value left. The other option is my IWM March $151 covered call that’s $7.10 in the money and has $0.37 in time value remaining. I mentioned this IWM call yesterday. It’s looking more likely that I need to allocate those funds to a new position or simply roll the call early. I’ve been waiting for a small correction and since we haven’t had one, I’ve missed out on further gains. My internal debate now is how much I should add to my account before a dip versus continuing to be patient.

I was thinking for adding more to this account to reach $100,000 again and haven’t made a decision yet. I’m torn between investing and working it to grow, adding to my emergency fund, or saving it towards buying a Tesla Model 3. I want to get a Tesla, but I’d want the $40,000 model and my current car is paid off and runs great. It’s only a 2013, so it’s hard to part with it this young. The last option is that I could move money from my other investing account. It’s the same to me as far as how much I’d have in a taxable account, so this might be the best move for what I want. It’s all kind of moot if I’m not fully invested with the cash I have in this account already.

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

– Large-cap ETF: 0.0%

– Mid-Cap ETFs: 39.19%

– Small-Cap ETF: 17.63

– International: 4.07%

– Individual Stocks & Other Sector ETFs: 19.57% (most of this is large cap since I have 100 AAPL shares and 200 XLF shares 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, February 28, 2019:

– Dow Jones: YTD change +11.62%, 12-month change +5.95%

– S&P 500: YTD change +11.48%, 12-month change +4.68%

– NASDAQ Composite: YTD change +13.52%, 12-month change +3.57%

– Russell 2000: YTD change +17.03%, 12-month change +5.58%

– S&P Midcap 400: YTD change +15.14%, 12-month change +4.14%

My return according to Quicken through February 28, 2019:

– YTD Return: +5.33% (not annualized)

– 1 Year Return: -13.77%

The VIX ended the month at 14.78 and the VXN ended at 17.17. The VIX finished February 1.79 points lower than the end of January. The VXN finished 3.07 points lower. The VIX peaked on February 7, when it hit an intraday high of 17.89. The VXN peaked the same day at 21.96. These are decent levels to sell volatility – not too cheap and not too anxiety filled. That doesn’t mean stocks can’t roll over from here, but if they do, we’ll get a little reward. A good 3-5% price drop could help us out on pushing vol higher to give us an opportunity to open new positions.