Happy MLK Day!
music selection: “Wishing Well” — Terrence Trent Darby
weigh-in: 220.4 +2.2
I have seven positions that expired over the weekend. Three were long put positions opened as hedges that expired worthless. Four were net debit spreads, two of which have not been disclosed here before as they were recommendations from behind a paywall.
UBER, DRI, and PLAY were long put positions purchased with a large amount of time value remaining. UBER is actually a long term capital loss. I thought Uber would decline as it loses money faster the bigger it gets. The unit economics make no sense but the market loves the innovation. I lost 100% of 1,184 over 477 days. Darden (DRI) and Dave and Buster’s (PLAY) were Covid-19 hedges in heavily indebted restaurants. I saw high volume low margin businesses that were severely challenged and perhaps might go bankrupt. Both managed to get access to additional funding and my puts expired worthless. I lost 980 on DRI and 1,110 on PLAY both over 268 days.
Previously discussed here were bear put spreads in HRL and KMB. The 52.5/55 strike HRL spread finished in the money. Only 9 spreads were remaining after 8 were assigned early during the week. I earned 376 on those 9 spreads and and 334 on the other 8 for a total of 710 in profit on 3,540 in capital risk over 54 days. That is 20% or 136% annualized. A 140/145 bear put spread in KMB expired in the money on Friday. I earned 450 in profit on 4,050 in capital at risk over 26 days. That is good for 11% or 156% annualized.
Not discussed here before is NVO, which I had a bull call spread in from a recommendation made from behind a paywall. I had the 65/67.5 bull call spread, purchased for 1.308 per share. Across thirty spreads that was 3,924 in capital at risk. The position closed in the money on Friday and earned 3,576 in profit over 53 days, good for 91% or 628% annualized. I traded a set of strikes that was aggressive but less aggressive then the recommendation. It worked out well.
Also not discussed here before due to the paywall was ASAN, which I also had a bull call spread in. Trading the 25/30 strikes for 2.40 a share, I put 3,840 in capital risk. The position was in force for 33 days and produced profit of 4,160 over that span, good for 108% or 1,198 annualized. Like NVO, I traded a less aggressive pair of strikes than recommended. The returns on both were good enough I saw no reason to get greedy.
Total profit across all 7 positions was 5,288. A total of 6,559 has been collected so far in the month of January, despite have total losses in four hedges. I remain hopeful that my 18 strike VXX put can be sold for 10.00 before month end for an additional 1,530 in profit. I also have good till canceled bids at par on several bonds that are trading close to 100. Passive income is currently weak, covering just 41% of my budget. I hope to roll some profits in preferred share and municipal bond funds as the year rolls on to improve upon that with low risk. I also hope to unload my 13 strike VXX puts at break even to raise some cash to deploy when the bubble finally pops.
Devour your prey raptors!