Month End Summary – October 2020

October worked out well for me since I more than made up for my September losses and saw my account balance improve as the major indexes lost ground. I timed my QQQ covered call well, but should’ve used a lower strike (at least so far). My TLT position played the main roll for my account’s success in October and still has a lot more room for gains. I would’ve done even better if I had sold more naked calls, but I opted to reduce my risk and didn’t replace my October calls. I will, but want to see how the election reaction plays out. Hopefully, I can make another move later this week if not next week.

My account ended October with a Net Asset Value (NAV) of $109,240.07 according to Interactive Brokers (IB) after ending September with a balance of $106,759.82. I had a gain of $2,480.25 (~2.32%) on paper for October (better than the Dow’s 4.61% loss and the S&P’s 2.77% loss). I had $2,041.76 realized gains in October from my TLT options.  I had to pay $45.71 in dividends (+38.82 from QQQ and -$84.53 from TLT) and $19.11 in short interest for my short TLT shares.

Quicken reported that I have an account value of $109,257.33, which is the same as what IB shows after I subtract the negative $17.26 in interest accruals that IB adjusts in advance of the actual payments.

I’m only 23.45% invested in this account as of the end of October, 2.37 percentage points less than the end of September. I have $83,621.33 left in uninvested cash and no options set to expire in November. This cash total is definitely off some since I’m still sitting on a $5.50 paper loss per share on my 500 short shares of TLT, not including the premiums I’ve received. I actually have a profit on my TLT position when I include the premiums.

Last month I said I might sell a QQQ covered call and buy puts on SPY and IWM. I only sold the covered call and missed my opportunity to buy protection. At least TLT fell along with equities, so I profited anyway.

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

• Large-cap ETF: 24.66% (Only QQQ for now)
• Mid-Cap ETFs: 0%
• Small-Cap ETF: 0.0%
• International: 0%
• Individual Stocks & Other Sector ETFs: 0%
• Bonds: -72.12% (not including my TLT October covered puts and naked calls)

Here’s how I compare to the major indexes:

• Dow Jones: YTD change -7.14%, 12-month change -2.01%
• S&P 500: YTD change +1.21%, 12-month change +7.65%
• NASDAQ Composite: YTD change +21.61%, 12-month change +31.59%
• Small-caps: YTD change -8.63%, 12-month change -3.34%
• Mid-caps: YTD change -1.61%, 12-month change +3.71%

My return according to Quicken through October 30, 2020:

• YTD change: +9.24% (not annualized)
• 1 Year change: +12.25%

The VIX ended the month at 38.02 and the VXN ended at 41.30. The VIX finished October 11.65 points higher than the end of September. The VXN finished 5.88 points higher. The VIX peaked on October 29, when it hit an intraday high of 41.16. The VXN peaked a day earlier at 43.45. Volatility is higher than all but one week from the previous five years, not counting the first half of this year when the VIX hit the mid-80s. The rest of this week should be interesting and then after the dust settles, we should get back to some normalcy post-election scares. We’ll still have COVID scares to invest around, but we can all assume that will come to an end one day, even if it isn’t near-term.