It looks like selling some of my options earlier this week is turning out not to have been such a good idea. Bank of America (BAC) is continuing to run and isn’t pulling back like I thought it might. Since BAC ran up, I was able to buy the May $7/$6 1×2 put spread for flat (no cash spent). This will make money for me if BAC falls anywhere between $7 and $5 in May with a maximum payout occurring at $6. This will allow me to be a little more protection if I do do buy this stock sometime in the future.
In better news, I kept my options in Toyota (TM) and they went into the money this week. This is a play in the recovery in Japan/Asia and auto recovery.
The portfolio will likely stop making gains on Apple (AAPL) with it getting near $500/share. I sold Jan ’13 $500 calls last year on this stock for $25 when I bought the shares for ~$385. As AAPL goes up this options lose nearly as much as the shares gain. This now has become a slow theta/tax play. I will keep this stock (gain) until I have held it for one year and will sell the options (loss) the day before the one year anniversary.
The S&P 500 is up 7.7% so far this year and my portfolio is up 27.0% YTD. This gives the portfolio a very aggressive beta of 3.5 times the S&P 500. My cash position is 6.3% of the portfolio and the margin reserve requirement is down to 12.5% of the portfolio due to lower market volatility and my short options being further out of the money. I expect my beta to start slipping as many short OOM Call strikes are getting nearer to the money, it may even get as low as 3 soon. ;-)
traderwasteland
mattmarsh
miltonfriedman
rshm02
