End of Month Summary – June 2020

June was another positive month for my account. I didn’t break any records with my gains, but my account balance did improve more than the Dow and S&P 500 indexes again. Small-caps, mid-caps, and the NASDAQ beat me for the month, but I’m ahead of all, except the NASDAQ, for the year-to-date and the past 12 months. TLT remains as my biggest holding (as a short) and moved against me slightly, but my options on it made up the difference and then some. QQQ was my biggest gainer with an improvement of $1,424. I had planned to sell a covered call on it, but I decided to let it continue to climb unrestrained since I don’t have a lot of other equity exposure.

My account ended June with a Net Asset Value (NAV) of $101,541.66 according to Interactive Brokers (IB) after ending May with a balance of $99,621.81. I had a gain of $1,919.85 (+1.93%) on paper for June (slightly better than the Dow’s 1.69% gain and the S&P’s 1.84% gain). I had $3,046.60 in realized gains in June from my TLT naked calls and covered puts and my MSFT naked put minus the $105.09 dividend I had to pay on my short TLT shares and the $19.13 in short interest I had to pay. IB charged my account $9.34 in monthly minimum trade fees. I won’t have that charge in July because my account was over $100,000 again on the final day of the month.

Quicken reported that I have an account value of $101,520.97, which is one cent less than what IB shows after I subtract the negative $16.75 in interest accruals and the positive $42.43 in dividend accruals that IB adjusts in advance of the actual short interest and dividend payments. 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.

I’m only 35.60% invested in this account as of the end of June, 6.71 percentage points less than the end of May. I have $65,397.78 left in uninvested cash and only one option set to expire in July. This total might be off some since I was nearly $15 in the hole per share on my 500 short shares of TLT and haven’t accounted for my August naked calls and covered puts. I plan to replace my IWM July naked put before expiration, but keep expecting a deeper sell-off soon to give me a better premium.

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

• Large-cap ETF: 24.38% (including QQQ)
• Mid-Cap ETFs: 0%
• Small-Cap ETF: 12.11%
• International: 0%
• Individual Stocks & Other Sector ETFs: 0%
• Bonds: -80.72% (not including my 5 TLT August covered puts and naked calls)

Here’s how I compare to the major indexes:

• Dow Jones: YTD change -9.55%, 12-month change -2.96%
• S&P 500: YTD change -4.04%, 12-month change +5.39%
• NASDAQ Composite: YTD change +12.11%, 12-month change +25.64%
• Small-caps: YTD change -14.91%, 12-month change -9.98%
• Mid-caps: YTD change -8.69%, 12-month change -2.73%

My return according to Quicken through June 30, 2020:

• YTD Return: +1.54% (not annualized)
• 1 Year Return: +10.45%

The VIX ended the month at 28.62 and the VXN ended at 29.51. The VIX finished June 1.11 points higher than the end of May. The VXN finished 1.55 points higher. The VIX peaked on June 11, when it hit an intraday high of 42.58. The VXN peaked the same day, at 37.80. The current levels are above historic averages making it a more profitable time to sell volatility, but the risk is greater too. I find it hard to see how the markets can climb much more until we have a more robust return of consumers and that’s just not possible yet.