Month End Summary – February 2021

I had another good month in my account for February. I ended February with a Net Asset Value (NAV) of $130,012.40 according to Interactive Brokers (IB) after ending January with a balance of $127,932.44. That means I’ve gained a touch over $5,000 in two months. I had a paper gain of $2,079.96 (1.63%) on paper in February (below the Dow’s 3.17% and the S&P’s 2.61%, but better than the NASDAQ’s 0.93%). I had only one closing trade (QQQ February $320 covered call) in February and I had a $600.28 loss on it. I also had to pay $87.89 in short dividends and $18.54 in short interest/borrow fees. QQQ is above $320 today and I have a paper profit on the new call I sold, so it seems worth the loss on the covered call instead of letting it get called.

Quicken reported that I have an account value of $130,030.48, which is the same as what IB shows after I subtract the negative $18.08 in interest accruals that IB adjusts in advance of the actual payments. I’m ready for my TLT position to wrap up this month to stop paying the monthly dividends and short interest. It’s a shame I didn’t sell my covered puts at a lower strike, but it looks like I’ll get out of it what I planned.

I don’t expect to maintain a pace of 2% each month, but it’s a much better way to start the year than down. Since my goal for 2021 is a gain of 8%, I’m halfway there already. I don’t need to take big risks for the next 10 months to gain another 4%. Of course, it’s not my style to take the money and run, but I will reduce my risk when I see paths to a decent profit without putting this account in danger.

I’m only 37.93% invested in this account as of the end of February. I have $83,641.36 left in uninvested cash and only my TLT puts set to expire in March. This cash total might be off some since I’m basing it off the strike price I expect to buy my shares.

This is my asset allocation in my IB account as of the end of February 2021:

• Large-cap ETF: 24.16% (Only QQQ for now)
• Mid-Cap ETFs: 0%
• Small-Cap ETF: 14.61% (MJ and ABNB naked puts)
• International: 0%
• Individual Stocks & Other Sector ETFs: 0%
• Bonds: -55.04% (not including my TLT March covered puts)

Here’s how I compare to the major indexes:

• Dow Jones: YTD change +1.06%, 12-month change +21.74%
• S&P 500: YTD change +1.47%, 12-month change +29.01%
• NASDAQ Composite: YTD change +2.36%, 12-month change +53.98%
• Small-caps: YTD change +9.43%, 12-month change +41.68%
• Mid-caps: YTD change +4.85%, 12-month change +35.14%

My return according to Quicken through February 26, 2021:

• YTD change: +5.06% (not annualized)
• 1 Year change: +24.38%

The VIX ended the month at 27.95 and the VXN ended at 34.06. For the year-to-date, the VIX peaked on January 29, when it hit an intraday high of 37.51. The VXN peaked the same day at 40.53. Both volatility gauges are above their multi-month averages, but today they are moving back into those previous normal ranges. Selling vol at these levels can create great returns, but I expect more fits and starts with the markets until interest rates find some footing. Traders need to be selective with the risks we take.