Month End Summary – March 2020

March was brutal for those who were not in cash or not short the stock market. I lost some money on paper, but was still far underinvested and even started to put new money to work during March. My two April options look like they’ll be assigned at expiration, if not beforehand. I’m actually surprised my TLT naked calls weren’t assigned before it went ex-dividend today. The dividend is small enough that apparently nobody thought the risk of owning TLT at these levels was a smart move. It would have been this time since TLT is up $3.47 as I write this. Since the dividend is so small, I won’t have to stress about paying as much when I’m short 500 shares at the next ex-dividend. My plan is to sell far out of the money covered puts to cover the cost of the dividend while I wait for TLT to come back down to non-panic prices.

My account ended February with a Net Asset Value (NAV) of $90,183.92 according to Interactive Brokers (IB) after ending February with a balance of $95,754.02. I had a paper loss of $5,570.1 (-5.82%) on paper for March (less than half the Dow’s 13.74% loss and the S&P’s 12.51% loss). I had no realized gains in March since I didn’t close any positions, but at least I received $79.27 in interest. I received no dividends in March since I didn’t own anything that I was long. IB charged my account $9.39 in monthly minimum trade fees.

Quicken reported that I have an account value of $90,159.12, which is a penny less than what IB shows after I add in the $24.79 in interest accruals that IB credits in advance of the actual payment. I’ll wait another month or two to fix the one cent rounding error to see if it rounds back the other way and fixes itself soon.

I’m only 39.09% invested in this account as of the end of March, 22.09 percentage points more than the end of February. I have $54,932.88 left in uninvested cash and two options set to expire in April. My QQQ April $225 naked put is more than $40 in the money today and my five TLT April $149 naked calls are almost $20 in the money today. I’m confident they’ll both be fine over the next year or two. TLT should move to a profit this year, but QQQ could take longer, but I won’t be surprised if QQQ is back up to $219-220 within six months.

This is my asset allocation in my IB account as of the end of February 2020:

• Large-cap ETF: 24.73% (including QQQ)
• Mid-Cap ETFs: 0%
• Small-Cap ETF: 12.2%
• International: 0%
• Individual Stocks & Other Sector ETFs: 17.19% (only MSFT for now)
• Bonds: 0.0% (not including my 5 TLT naked calls)

Morningstar stopped updating the page I’ve been using for the past decade to show a comparison of the indexes. I was able to dig up individual Morningstar pages for the Dow Industrials, S&P 500, and NASDAQ returns, so the list of indexes is shorter than it used to be. Anyway, here’s how I compare:

• Dow Jones: YTD change -23.20%, 12-month change -15.47%
• S&P 500: YTD change -20.00%, 12-month change -8.81%
• NASDAQ Composite: YTD change -14.18%, 12-month change -0.38%

The VIX ended the month at 53.54 and the VXN ended at 51.29. The VIX finished March 13.43 points higher than the end of February. The VXN finished 8.16 points higher. The VIX peaked on March 16, when it hit an intraday high of 57.83. The VXN peaked the same day, at 82.47. I started nibbling in on a couple of positions over the past week and would like to add more. Before I get overextended, I want to see how my margin is going to adjust after my TLT options are assigned. Since I’m confident TLT is going to drop before too long, I want to avoid being put in a position where I’m forced to buy my short shares early. I think I have plenty of cash and margin to ride it out, but I’d rather know for sure before risking too much.