Investments Trade Log

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white belt
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Re: Investments Trade Log

Post by white belt »

Bought 58 shares of URNM at cost basis of $70.59. I still like the long term bull case for uranium.

Bought some more MSOS to bring total to 161 shares at cost basis of $24.99. Catching falling knife finger chopping.

WFJ
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Re: Investments Trade Log

Post by WFJ »

Taking a lot of risk off the table. IMHO, the worm has turned and it's time to protect yourself from a market dislocation. Generals are still marching, but very slowly. NFLX is the ringing of the bell at the top for me.

Junk tech (PTON, UBER, ARK) have been clobbered and will get worse. Crypto/NFTs may have some dead cat bounces as leverage can go from 20x to 100x but also dead money at this point. Among Junk tech/Crypto/NFTs, survivors will experience 95% drawdowns over the next few years with most going to $0.

Boring US did not rip as much and may be safer, but don't think there will be anywhere to hide for the next few months and not a good time to BTFD.

I've seen three total rips down and this feels like the start of number four. Margin calls may start this week and usually sets of a cascade of losses across the board. Farts in a jar will be the only place to hide.

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Seppia
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Re: Investments Trade Log

Post by Seppia »

My portfolio of individual stocks has outperformed the broad market by approximately 15% since November 1st, bringing my total return since 2016 slightly above a global index fund (so below S&P still, but my benchmark is global).
I feel great now with an above average (for me) cash balance, lots of inflation protection, plus mostly companies with low debt and good moats.

Most importantly, outside of my indexes, I own zero shitcos, NFTs, and other similar soon to be worthless crap

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Lemur
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Re: Investments Trade Log

Post by Lemur »

@WFJ Similar sentiment here...inflation, fed hikes, and potential large scale war (Russia/Ukraine + NATO) have had me reconsidering my normally bullish feelings. But I did start deleveraging and reducing risk end of 2021.

I've short puts on PLUG ($25) and AMD ($130) that are not cash covered at the moment. Risky to keep them open; I've been tempted to just close them out and take the L but they expire February 4 so I'm gonna wait it out...

Initially, I was going to be inactive in the options market but I've decided to start selling covered calls against my individual stocks (mostly above cost basis) and begun building a cash buffer and averaging down when it makes sense to me. I figure I could make money in a sideways / bear market in 2022. Edit: To add one point, one change I want to make it only selling CCs when IV / VIX is elevated. This will increase my chances of being able to close out at profits. I don't want to have my strikes blown through like what has happened to me before.

WFJ
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Re: Investments Trade Log

Post by WFJ »

I've been about 50% direct indexing for the last two years (Schwab slices made buying easy, but learned selling more time consuming) and was long Nasdaq minus 'woke' tech (TWTR, PYPL, SQ, NFLX, GOOG, FB, TSLA, etc..) and picked up about 100 bps/year over market but sold almost all of tech (keeping MSFT and AAPL). Still have an SP 500 direct index (minus junk tech high PE and woke) and will let it ride. Still hold 50% in boring VOO, SCHB, SCHM, SCHV, SCHD and various Vanguard employer retirement. Took most of the gains from March 2020 and put into cash as reason for most of the rip from that time (Fed) appears to be going away.

If anyone is at a retail firm and knows of margin calls, please weigh in as once these start, the markets will crumple. These slow burning selloffs are much more dangerous than 5% dislocations with small rebounds. I suspect the NFLX and PTON dumps caught risk managers off guard as the moves have been nuts. If I (or anyone) knew of the margin balances and policies in Crypto/NFTs, I could estimate their damage, but this area is unknown to everyone and a black hole and another source of uncertainty and risk.

IMHO, now is a time to stop anything complex and make it as simple as possible, pretend you are about to visit the space station for 6 months and have to allocate funds like you won't be able to trade while in space.

I owned some GBTC in 20016 and 2017 and not far from where I dumped it in October 2017. I guess it is a good store of value ;) One hypothesis I have is the discount between GBTC and BTC is the amount of funny money created from tether and other gimmicks. Roughly 300,000,000,000 of BTC price is from fake tether. The nature of crypto makes this impossible to test but is one explanation for GBTC 33% discount.

Dream of Freedom
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Re: Investments Trade Log

Post by Dream of Freedom »

https://www.youtube.com/watch?v=hNMsoRtRKew

The best belly laugh I've had in a while. I don't really agree with it medium to long term, but still. The title does claim it will be deleted soon.

white belt
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Re: Investments Trade Log

Post by white belt »

white belt wrote:
Wed Dec 08, 2021 5:26 pm
1. The most obvious trade is to buy puts on RSX.
The first set of my RSX puts expired today. Bought them with cost basis of $502.38 on 30 December, sold them today for $2742.65 ($2240.27 in profits).

I have more RSX puts expiring in 2 weeks.

Humanofearth
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Re: Investments Trade Log

Post by Humanofearth »

Took a lot of profits this last week. Sold some of my Jewel at 18 just before the crash, some more at 12, and capitulated at 8.53 to get the final bit for my final tax bill to the sick country that'll kidnap me if I don't pay them for no reason other than being born there. But it's the last time. And I am up more than most will make in their lifetime in the past year, even after the crash. No point getting too greedy.

Started farming Jewel at 1.35 a coin at 3000%+ so I count it as a success. Profits obviously went into BTC 2/3, with 1/3 going to pay the taxes and also becoming an emergency fund in UST as a wedding/family fund. Also, should've taken more profits when I saw it swelling as hard as it did, it ended up being like 2/3 of my portfolio for a minute, I held way too little BTC going into the crash, technically negative fiat as well, changing this going forward to better hold up in market crashes as my situation has changed (wanting a family soon) so my risk tolerance has lowered a bit.

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Lemur
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Re: Investments Trade Log

Post by Lemur »

Not a fan of taking a realized loss but sold off my stake in Walmart so that my short puts are now cash secured because the chance of assignment is 100% at this point. Geez. On the bright side, I have been thinking about selling WMT for a while now. WMT was the only stock I've that somewhat survived the 2022 slaughter so far and I only lost 6%.

Best case is market rebounds and my short puts close out for profit and then I have a whole bunch of cash I can deploy to depressed stocks.

Worst case is market keeps falling, I get assigned and have a bunch of unrealized losses but at least I don't have to worry about margin calls or anything like that.

DCA it is.

SPY is now down 9.44% YTD.

WFJ
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Re: Investments Trade Log

Post by WFJ »

Lemur wrote:
Mon Jan 24, 2022 10:30 am
Not a fan of taking a realized loss but sold off my stake in Walmart so that my short puts are now cash secured because the chance of assignment is 100% at this point. Geez. On the bright side, I have been thinking about selling WMT for a while now. WMT was the only stock I've that somewhat survived the 2022 slaughter so far and I only lost 6%.

Best case is market rebounds and my short puts close out for profit and then I have a whole bunch of cash I can deploy to depressed stocks.

Worst case is market keeps falling, I get assigned and have a bunch of unrealized losses but at least I don't have to worry about margin calls or anything like that.

DCA it is.

SPY is now down 9.44% YTD.
Be careful shorting puts as you can end up owning a lot of something in a short time period. 1987 wiped out a lot of "conservative" investors who were persuaded to sell puts on the S&P 500. How could you lose selling puts 5% out of the money? They got put S&P when down 5%, were called out when down 20% and totally wiped out. If you want to sell puts, buy puts further out of the money. There isn't anyone in the Fortune 400 that got there by selling naked puts and unlikely to be true in the future.

https://www.fidelity.com/learning-cente ... put-spread

jacob
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Re: Investments Trade Log

Post by jacob »

WFJ wrote:
Tue Jan 25, 2022 2:13 pm
There isn't anyone in the Fortune 400 that got there by selling naked puts and unlikely to be true in the future.
Maybe no individual writers, but maybe well-capitalized (which is all relative) insurance writers with a multi-decadal horizon ... Whenever someone takes the left wing of a straddle/strangle et al, there's always someone taking the other side in some way, often along a different dimension (like well-capitalized long-run vs speculative short-run or other dimensions like informed or not and so on).

WFJ
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Re: Investments Trade Log

Post by WFJ »

I meant Forbes 400 and yes, the house can win in this area. The juice on option trades usually erodes any gains for the buyers and sellers, while the house gets rich. I've sold options and futures, but only when I was at a trading terminal every minute of the trading day. A few minutes away from the desk can really cause a lot of damage.

Insurance companies, mutual funds, hedge funds, pensions often use options as a way to leg into trades and end up making money.

andy
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Re: Investments Trade Log

Post by andy »

I feel like options typically hurt the average joe vs. help them, but if you can do it consistently and successfully, that's great. A lot of moving pieces (theta decay, IV, etc), but they can be fun. I prefer to keep 10% of my portfolio in VXZ (Long Mid-Term VIX ETF) as my main hedge and rebalance monthly. I view it like paying for insurance which pays off in the event of a crash. Believe it or not, a portfolio of 85% SPY 15% VXZ, rebalanced monthly, outperforms 100% SPY with much less risk. Kind of a poor man's version of Artemis Capital's dragon portfolio. Rule #1 - Don't lose too much money.

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Lemur
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Re: Investments Trade Log

Post by Lemur »

@andy.

I agree. The average joe usually loses to the house. This includes myself. Though I haven't given up yet on options trading but have been moving away from them more. I was supremely confident in 2021 performing options trading on a regular basis; I had a great run where I was covering a half months' expenses rather reliably until one of my trades blew up and wiped out all my options trading gains for the year.

2022 and I'm already starting off in the hole. This education is expensive.

My particular issue was with naked short puts. I was profiting just fine running covered calls above underlying cost basis and just accepting the tradeoff of gains every now and then. Sometimes I would do a put credit spread as @WFJ alluded too but found the Vanguard interface to be rather annoying with having to open/close each leg. And I'm too set in my ways to get another brokerage.

Returning to covered calls for this year and I don't have plans to run short puts unless they're cash covered. Want to keep playing the game because it is indeed fun but I can now see myself not options trading anymore in the future. I was previously a big proponent of them - even tried to develop some sort of methodology where options trading can be combined with SWR. Possible I'm just not experienced enough. I am also questioning how I want to spend my time in other ways.

Sticking to index funds (maybe a few individual stocks) and rebalancing occasionally sounds better everyday.

white belt
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Re: Investments Trade Log

Post by white belt »

IMO, for the retail investor, options are a tool that can be used to tailor unique risk/return profiles for specific purposes, but you will still need to generate your own alpha. Although I know there are some that argue a retail investor can generate alpha by just following basic strategies like CC writing (e.g. TastyTrade), I’m skeptical of the long term viability of that. I understand that in theory there are places where a retail trader can pick up change in front of a much larger institutional steam roller, but I’m not sure the juice is worth the squeeze.
Last edited by white belt on Wed Jan 26, 2022 5:27 pm, edited 2 times in total.

andy
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Re: Investments Trade Log

Post by andy »

@lemur

I think anyone who tries leverage in some way, shape, or form, has a few war stories. You are not alone. TDAmeritrade has a papertrading option on their app if you want to test out any strategies without losing actual money. Also, this is a great free tool to figure out risk/reward on options: https://unusualwhales.com/opc. There's some common options strategies you can load as well. There's a tool you can toggle to see how Implied volatility impacts the prices. Really makes a huge difference.

@white belt

Agreed with you on that. I think options are very challenging. Even if you dedicate a lot of time to learn them, easy to lose in long run.

Salathor
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Re: Investments Trade Log

Post by Salathor »

I don't personally believe there's any +EV in options trading for the average trader. I believe there's potential in buying LEAP calls as a relatively cheap form of leverage without the huge downside of actually taking a massively leveraged position, but that's still just leveraging equities. There isn't 'free money' lying around in options or else market makers would be buying them up already.

There MIGHT be places where you can better achieve certain financial goals (reliable but lower income, higher but more volatile yields, etc.) using options, but, as always...

TANSTAAFL

white belt
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Re: Investments Trade Log

Post by white belt »

Salathor wrote:
Thu Jan 27, 2022 12:41 am
There isn't 'free money' lying around in options or else market makers would be buying them up already.
The big boys are only interested in trades that scale for them, so in theory there very well may be opportunities for someone who is only trying to generate ERE-sized income. I haven't explored such opportunities because at the moment I'm more intrigued by asymmetric bets. However, it could be a fun challenge to try to generate consistent ERE-level income (~$1000 a month) with a relatively small sized portfolio.
_______________________________________________________

RSX ripped up ~6% to $23.23 and I took the opportunity to buy more puts on it today. I now have ~$2.5k in 22.5 strike expiring on 2/4 and $1K in 22 strike expiring on 2/11. I'm a bit concerned that even 2/4 may be too early for the situation to further develop, but we'll see. On the one hand, maybe everything is already priced in. On the other hand, these complex tail risk events are very difficult to price accurately if you believe the writings of Taleb. So far I've taken $2.2k in profits on the trade so I have some buffer if my timing is off for some of the remaining contracts.

thedollar
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Re: Investments Trade Log

Post by thedollar »

Volatility is pretty extreme atm. I'm forced to hold majority of my stocks due to taxes on unrealized gains, but I don't see any point in being in stocks for the next 3 months time until we see the effects from Fed winding down economic support. Huge risk IMO.

thedollar
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Re: Investments Trade Log

Post by thedollar »

I've brought down my equity exposure significantly because of risks in the coming months:
- 50% risk that Putin will invade Ukraine. Russia only makes up 3% of the world economy and it's unlikely to have any long-term effects, however, the market hates uncertainty and surprises.
- Fed are winding down record-high quantitative easing that we are all relying on for low rates and high asset prices
- Covid-19 severity and restrictions seems to be disappearing which would impact weird demand spikes and shortages (and extreme prices) that have benefited companies

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