October 2008 Expiry Update

Here’s an update on my current positions.

Arbitrage Account:

  • Own 400 XHB @ cost of $22.72 : XHB closed at $14.30 (position at -$3,368.00) : Cash Flow $2,058 Note: I own 400 shares of XHB with 4 contracts for Dec $23 strike option sold.
  • Own 400 DDM at cost of $74.30 : DDM closed at $34.80 (position at -$15,800.00) : Options Cash Flow $685.00
  • Own 500 DUG at cost of $43.50 : DUG closed at $52.60 (position assigned at $42) : Options Cash flow $3,451.00 Note: Position will close at $42.00 for an anticipated loss of $750.00
  • YTD Options Cash Flow: $7,435.00

Mini Account:

  • Own 200 DDM at $77.80 : DDM closed at $34.80 (position at -$8,600) : Options Cash Flow $2,502.00
  • Bought 100 UYG at $10.08 and sold October $10 call : Assigned at $10.00 to rake in $80.00
  • YTD Options Cash Flow $2,315.00

Power Account:

  • Own 500 DDM at $71.95 : DDM closed at $34.80 (position at -$18,575) : Options Cash Flow $1,100.00
  • Own 400 OIH at $109.17 : OIH closed at $90.00 (position at -$7,688 ) : Options Cash Flow $2,545.00
  • Own 400 SSO at $65.65 : SSO closed at $30.80 (position at -$13,940) : Options Cash Flow $1,335.00
  • YTD Options Cash Flow: $13,622.50

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3 Responses to October 2008 Expiry Update

  1. The Travelin' Man says:

    Hey Rich –

    Thanks for sticking with posting results, even when the results don’t look pretty on paper. You know that I am a long time follower of this blog, and I have always preached in my comments in support of this system that you should always be willing to own whatever fund you buy at the price you buy – in the event that you DON’T get called. I do that in my own trades, and I am sure that you do the same, which is one of the reasons I know that you are not too panicked over the paper losses on some of these funds. If you do believe that the market will rebound over time, being long in bull market positions will eventually hit.

    Couple of questions, though….

    (a) Any thoughts on averaging down some of the cost on these positions by grabbing a little more? Or, are you angling some time on this one?

    (b) I asked this question earlier in the year and wondered if your feelings have changed now that we are in the final quarter. Any plans to divest yourself of some of these positions and grab the tax advantage of the capital loss?

    I am toying with doing that on some individual stocks that I don’t see rebounding in a reasonable time horizon. Just wanted to gauge your thoughts.

  2. RichSlick says:

    Tman,

    My Mini & Power accounts are LONG term accounts that I plan on holding for the next decade or longer. The arbitrage account is really short term as it is a borrowed funds account.

    As to adding to my positions, I have been doing so across all accounts. I own DDM at $77, $74 and $71. I have considered buying DDM at the current $30 level but I already own over 50k of leveraged ETFs that I’ve held back. The MAIN reason though is that the ETF Covered Call action simply isn’t worth it with DDM & SSO right now.

    I’m getting much bigger bang for the buck with OIH and the very risky UYG.

    To answer your questions:
    a. I will likely buy more DDM & SSO when the option action gets better – this is a great indicator that we’re on the rebound permanently.
    Until then, I let the ETF-Cashinator guide me.

    b. I won’t take any losses on any account. My Mini & Power are LONG term and don’t incur losses anyway as they are tax deferred accounts. No capital gains tax either – ZERO!
    My arbitrage account holds XHB & DDM. XHB will pop again in November or December. DDM will likely climb in January.

    Lastly, I STILL believe that after the election we will have a significant market pop. I’m not sure if the pop will come on November 5th (after the election) or in January (after the inaugural) but I think it will happen.

    If we hit a significant pop, I *may* cash out of some of my arbitrage positions ONLY. I will hold on to all my other positions for the foreseeable future.

    There are too many things going on right now that I’m considering as investments; I’ve been waiting for overseas properties to devalue so I can purchase a home/investment in Australia, New Zealand or Uruguay/Argentina amongst some other places.

    So nothing is really out of the question; I do keep cash reserves out of the market which I’ve considering putting into the market since it’s at very distressed levels.

    I also own company stock from my employer that is down nearly 80% and is trading at a super bargain; I might load up on that too.

    There are many opportunities here and paper losses shouldn’t deter anyone but I will say this, I don’t EVER trade individual stocks anymore: Enron, Worldcom, WAMU, Ford & GM were once all good companies but look at them now!

    ETF’s is the ONLY way I go!

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