My hedges are mostly in the green.
music selection: “Back Where You Belong” — 38 Special
weigh-in: 213.2 +1.2 (too much King Cake)
I am again sitting out making new trades this week due to the continuing volatility. My bull call spread in BMY has become threatened and I may close early to cut my losses. I got early assigned over the weekend on my 5 spreads of CAKE bear put spread. I closed out the hedge leg this morning and booked 135 in profit on 2,365 at risk. The trade was open 56 days and earned 37% annualized.
Now as far as my hedges go, I have quite a few long dated puts in names I think are overly indebted and at risk of share collapse. Those have been in the red for some time as the market has marched higher. But recently, they have been paying off. I’m still down 11,000 in my main trading account this morning but it would be worse without the hedges.
I hold long dated puts in ALLY, COF, F, GM, HCA, HTZ, LYFT, MCK, PTON, SC, T, THC, UBER, JWN, RIG, and RAD. In total I have 15,737 in capital at risk on these hedges. As of this morning’s pricing, I am up 6,044 in unrealized gains for a 38.41% unrealized gain. It is a great relief to have some portfolio insurance when the markets puke up a sea of red like they are this morning.
Now is not a good time to be adding long dated puts. You want to be doing that when the market is calm and it looks like they are not needed. That is when you get the best pricing with lowest time value premium paid.
I also hold a small amount of gold and silver coins. I have a MS-65 saint gaudens, 20 MS-65+ Morgan silver dollars, and 50 dollars face in “junk” silver. I do not intend to accumulate any additional coins at this time as I’d rather have something that generates yield. That is the final leg of my hedging. I have a “high” allocation to debt securities that spin off a robust yield. This covers most of my annual spending, making me immune to pressure to “sell at the bottom”.
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Devour your prey raptors!