Month End Summary – May 2020

May was another good month for my account as stocks climbed and bond yields rose. My biggest opportunity for gains is in TLT still. With 500 shares short and additional naked calls in play, I have more upside potential from TLT’s decline than from another other position. I’m gaining on my equity naked puts too, but not as much and with a much lower cap on potential gains. My account performance remains much better than all indexes outside of the NASDAQ for the year-to-date and for the past 12 months.

My account ended May with a Net Asset Value (NAV) of $99,621.81 according to Interactive Brokers (IB) after ending April with a balance of $95,384.17. I had a paper gain of $4,237.64 (+4.44%) on paper for May (in between the Dow’s 4.26% gain and the S&P’s 4.53% gain). I had $754.51 in realized gains in May from my one IWM May naked put minus the $108.10 dividend I had to pay on my short TLT shares and the $6.77 in short interest I had to pay. IB charged my account $0.54 in monthly minimum trade fees. That goes away when I get my account over $100,000 again. I’ll pay again in June because I was a few hundred dollars short of the magic number on the last day of the month.

Quicken reported that I have an account value of $99,638.58, which is one cent less than what IB shows after I subtract the $16.78 in interest accruals that IB debits in advance of the actual short interest payment. I’ll give it another month again to fix the rounding error to see if it rounds back the other way and fixes itself soon. One penny corrected since last month, so maybe I’ll be even after June.

I’m only 42.31% invested in this account as of the end of May, 1.84 percentage points more than the end of April. I have $57,467.386 left in uninvested cash and three options set to expire in June. This total might be off some since I was more than $14 in the hole per share on my 500 short shares of TLT. I plan to replace the two option legs of my TLT position before they expire. I’ll probably do the same for my MSFT naked put too. I’m debating if I should sell a covered call on my QQQ shares before long also.

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

• Large-cap ETF: 23.44% (including QQQ)
• Mid-Cap ETFs: 0%
• Small-Cap ETF: 11.04%
• International: 0%
• Individual Stocks & Other Sector ETFs: 15.56% (only MSFT for now)
• Bonds: -82.11% (not including my 5 TLT June covered puts and naked calls)

Here’s how I compare to the major indexes:

• Dow Jones: YTD change -11.06%, 12-month change +2.29%
• S&P 500: YTD change -5.77%, 12-month change +10.62%
• NASDAQ Composite: YTD change +5.77%, 12-month change +27.33%
• Small-caps: YTD change -16.74%, 12-month change -5.82%
• Mid-caps: YTD change -10.54%, 12-month change +1.97%

My return according to Quicken through May 31, 2020:

• YTD Return: -0.38% (not annualized)
• 1 Year Return: +14.29%

The VIX ended the month at 27.51 and the VXN ended at 27.96. The VIX finished May 6.64 points lower than the end of April. The VXN finished 7.32 points lower. The VIX peaked on May 1, when it hit an intraday high of 39.57. The VXN peaked the same day, at 39.46. The current levels are above historic averages and maybe for a good reason with a lot of uncertainty left to play out this summer and fall.