Month End Summary – October 2019

Any month when I can beat the major indexes while accepting less risk is a good month. As in September, my TLT trade in October helped to juice my returns a little. Add in a good month for the S&P 500 and I was able to ride the wave to another positive month.

My account ended October with a Net Asset Value (NAV) of $98,004.64 according to Interactive Brokers (IB) after ending September with a NAV of $95,421.88. I had a gain of $2,582.76 (~2.71%) on paper for October (more than the S&P 500’s 2.04% gain for the month and the Dow’s 0.48% gain). I had $402.59 in net realized gains from my TLT naked calls, $58.53 in interest and $38.42 in dividends (FEZ and IWM). I also paid $3.06 for the monthly fee minimum. Interactive Brokers charges $10 each month as a minimum for trading fees on accounts that have less than $100,000. I think that’s going away as of October 1, but it won’t matter soon since I’ll be back over $100,000 again.

Quicken reported that I have an account value of $97,950.96, which is the same as what IB shows after I add in the $53.68 in interest accruals that IB credits in advance of the actual payment.

I’m 94.56% invested in this account as of the end of the month, 0.51 percentage points below the end of September. I have $5,335.69 left in uninvested cash and three different option contracts set to expire in November. Looking towards the end of the year, I could end up around $99,230 based on today’s gains and what I have left in time value. Of course, everything will change over two full months, but it’s good to see my account rebound like this. I have a few hundred dollars left in potential gain in my IWM shares before my November covered call is in the money and I might roll that contract before expiration. I’ll also be able to write new options on QQQ after my November contracts expire.

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

• Large-cap ETF: 39.7% (including QQQ)
• Mid-Cap ETFs: 36.22%
• Small-Cap ETF: 15.86%
• International: 4.00%
• Individual Stocks & Other Sector ETFs: 0.0%
• Bonds: 0.0%

According to Morningstar, here’s how I compare to the major indexes (including dividends) through the last trading day, October 31, 2019:

• Dow Jones: YTD change +18.19%, 12-month change +10.32%
• S&P 500: YTD change +23.16%, 12-month change +14.33%
• NASDAQ Composite: YTD change +24.97%, 12-month change +13.50%
• Russell 2000: YTD change +17.18%, 12-month change +4.90%
• S&P Midcap 400: YTD change +19.20%, 12-month change +9.02%

My return according to Quicken through October 31, 2019:

• YTD Return: +17.22% (not annualized)
• 1 Year Return: -0.56%

The VIX ended the month at 13.22 and the VXN ended at 17.36. The VIX finished October 3.02 points lower than the end of September. The VXN finished 2.67 points lower. The VIX peaked on October 2, when it hit an intraday high of 21.46. The VXN peaked on the same day at 24.40. These volatility levels don’t offer much – they don’t seem low enough to buy options and they aren’t high enough to reward much additional risk. I could make the case for either side probably, so it’s just a matter of where you think the market is heading to dictate next trades.