LOL!'s Market Timing Newsletter

[NW-Bound]

I just closed out several of my covered call options. Bought them back for a few pennies per share. The market is rebounding, yet the chance of the stocks going above the strike price is not that good, hence reflected in the price of the options. If I held till expiration in a few weeks I would make a few more bucks (meaning not having to pay the pennies), but it is not worth it. The market may even go crazy up, and I may have to sell some shares too.

So, I closed them out to book the gains, and freed up the stocks to write new call options whenever I feel like it.

 

[LOL!]

I've decided not to keep the DGS that I bought earlier this week over the weekend.
[...]
Update: Nice pop this afternoon, so I made my 1.5%. And with a bit of insanity, I used the money to buy shares of MTUM (US large-cap momentum factor).

And don't ask me to predict the future. The DGS I sold is up another 1.8% since selling, so I missed out on that. But the MTUM I bought is up 1.1%, so I will say I have done OK, but not as well as I could have. I can accept that because there was no way I expect to have perfect market timing 100% of the time.

With today's market increases, the portfolio performance might even catch up to its benchmarks by the market close.
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[NW-Bound]

... there was no way I expect to have perfect market timing 100% of the time...

You don't?

Well, I have not disposed of any EM share, nor have sold any call option on them. Perhaps tomorrow the price will drop, and I will kick myself for being greedy and miss the chance.

My short put options on semiconductors got assigned last Friday, and I found myself way overweight on this sector again. It rebounds, and I have made some gain in just 2 days.

As I have now more than $400k in this sector, have to divest of some. So, I wrote some out-of-the-money covered calls for Sep 21. Already regret doing it too soon. Back from fear to greed mode.

 

[LOL!]

So today is a rebalancing day where I need to buy equities. Since emerging markets have done terrible and set a new 52-week low, I bought some DGS (small-cap emerging markets) a moment ago. It was down more than 3% from yesterday. If DGS drops more, then I will just suck it up and buy some more. If it goes up by more than 1.5% in the next few days, I might sell it. 028

The above was posted on 8/15 which turned out to be an intermediate market low. Things (combo of DGS and MTUM) are up almost 5% since then.

The portfolio is now slightly ahead of its benchmarks that have foreign equities, but well behind the benchmark with no foreign equities. There is no easy way to catch up to the no-foreign-equities benchmark in 2018.

I have no idea what comes next, so I'm just sitting tight.
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[NW-Bound]

Hmmm... No update on this thread for almost 1 month.

I have got 35 covered-call option contracts expiring worthless this Friday 9/21, allowing me to pocket around $8K in premium. These contracts were written on various shares that I hold.

Come Monday, I still have these shares, and will sell more options. Did have 4 contracts barely in-the-money, and will get assigned. I may or may not buy these shares back.

 

[LOL!]

I have been doing some other things and the market has been mostly quiet.

I see that international funds dropped 4-5% (tariffs and/or Brexit?) and have since mostly recovered, but I missed making any trades. Bond funds have slacked off, too.

The FOMC meeting is next week and a new federal budget has to get passed. I think I wrote the same thing about a year ago, so it's the ol' same same ol'.

Some quarterly dividends will get paid in the next 10 days or so, but I think I am just going to spend them rather than reinvest. Then there's a 10-week adventure trip coming up where I will be off-grid most of the time. You'll be able to reach me with my Garmin InReach Mini.
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[OldShooter]

... I see that international funds dropped 4-5% (tariffs and/or Brexit?) and have since mostly recovered ...

Remember that the price of the internationals is inversely proportional to the dollar exchange rate in each country. The dollar has been mostly rising this year, so that has dampened apparent international results by a few percent. To analyze the situation you really have to look at the internationals in local currency (FTSE, DAX, etc.) and at the dollar. And, as usual, the problem is to get total return numbers not just the nominal index changes. Not easy.

 

[LOL!]

Intermediate-term Bond ETFs have dropped a relatively large amount today of almost 0.5%, so I intend to buy some shares today. I will probably exchange VTSAX (total US stock) into VBTLX (total US bond) by submitting the order before the close.

I'll wait until tomorrow or the next day to replace the VTSAX either by selling short-term bond funds or use the dividends that will be paid Friday or next week.

I'll post an update later today. 207

Update: Bond ETFs that I have been watching are climbing off their lows for the day. I really don't want to wait until the market close, so I will buy SPAB (Total US bond ETF) right now. I may still do the exchange, too, in another 40 minutes if bond funds drop a bit in that time.

2nd Update: 15 min before close submit exchange order VTSAX (equities) -> VBTLX (bonds)

 

[NW-Bound]

I bought back several option contracts with expiry of Oct 19. These covered calls were out-of-the-money when I sold them, and the stocks have dropped such that the options looked hopeless to me. They still had some residual time values of 50 cents or so.

In the past, I just let them expired worthless, but recently decided to be more active and bought them back to close. This frees my stocks to allow me to write new calls in the near future if the stocks turn around.

I do most of this option trading in tax-deferred accounts, else could have written new calls without closing old ones. Doing that means selling naked calls, and this is not allowed in tax-deferred accounts. It is also against my principle of not selling naked calls to limit risks, though being wrong would not bankrupt me with the level of trading that I do.

 

[LOL!]

Well, I feel like I saved myself from a 1% loss in VTSAX by selling those shares yesterday, but the bond funds I bought have gone down by 0.25%, so not so good.

Many things are down today, so I will probably sell some BIL (1-3 month T-bill ETF) and buy MTUM (large-cap US momentum), but I am hesitant. I think I'll look again after taking a long lunch break with friends and update later.
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Update: Just back from lunch and things have gone up from their lows of the day and they are not attractive anymore, so I decided to do nothing today.

 

[LOL!]

Sold BIL (1-3 month T-bill) and bought MTUM (US large-cap momentum) to restore my equity allocation from selling VTSAX a couple days ago. 558

 

[COcheesehead]

We have IRAs and 401(k)s at different brokers rather than at a single broker. For example, a traditional IRA at WellsFargo and a traditional IRA at Vanguard.

An obscure advantage of multiple accounts at different financial institutions is that you can get around frequent trading restrictions and trade settlement issues easily. For example, suppose you own VCSH in his IRA and VWO in her IRA. You need to buy more VWO, so you sell VCSH and free-ride the cash to buy VWO. A day later, you need to sell the VWO you bought, but you cannot since the first buy has not settled. So you sell VWO out of the other account.

Or you sell a Vanguard (or Fidelity) fund and they say you cannot buy back into it for 60 days easily. So you simply buy back in by using a different account not at Vanguard.

Those trading restrictions are in place to keep me from myself.
Buyer's remorse can be costly.

 

[NW-Bound]

And I bought more semiconductor and biotech ETFs.

I have been waiting for them to go up for me to sell some covered-call options. They went down. Darn!

So, I held my nose and bought more. Less than $25K worth, but enough to be able to tell myself I bought low. Does that mean I will have to sell even lower, throwing good money after bad?

 

[LOL!]

Does that mean I will have to sell even lower, throwing good money after bad?

Nope, it means you will have to buy even more if they go lower, but it is probably still throwing good money after bad.

 

[NW-Bound]

Stock AA is at 74% now. I said I wanted to reduce stock AA to 60%, but found it difficult to do so, being a stock lover. I kept buying back what I sold when it's lower, or found something else to buy.

I guess 74% is still better than 100%, like some posters here do.

 

[Oz investor]

Stock AA is at 74% now. I said I wanted to reduce stock AA to 60%, but found it difficult to do so, being a stock lover. I kept buying back what I sold when it's lower, or found something else to buy.

I guess 74% is still better than 100%, like some posters here do.

i am close to 100% for the same reasons you are heavier in stocks than you would prefer .

however ( US ) interest rates are rising the numbers might tilt my way next year

 

[NW-Bound]

I bought to close out 7 call option contracts, netting me $1006.60 to be exact. Left to be worthless on the expiry date of 10/19, they would get me another $157, but I wanted them off the book.

Minuscule gain, compared to what I have lost in the last 2 weeks. Oh well, I would have lost $1006.60 more, if I did not do these options.

Now, only if the market please go up some so that I can sell call options again.

 

[LOL!]

Today is the kind of day that I really like. 211

Sold more BIL and bought more MTUM since I am losing my shirt with MTUM. It is down about 3.8% from yesterday's close.

I may buy something else before the market closes and will update here.

 

[LOL!]

The last 5 minutes of today things dumped, so I had to buy more equities. Sold VCSH (short-term corporate bond) and bought VTI (total US stock).

 

[NW-Bound]

Surely, you bought. But how much did you buy? $500K worth?

I also bought. A single call option contract to buy the S&P at 2% higher, expiry Nov 16. If I am wrong, I will be out a few hundred bucks.

I have lost enough money with my recent purchases, and this is all the additional money that I am willing to throw on the bonfire. Would not win that much if I am right (doubling a few hundred bucks does not make anybody rich), but this market makes me so mad.

PS. My wife's BD is coming soon. If I win with this option, it's enough money to go to our favorite French restaurant. Maybe enough to pay for my children too. If I don't win, will have to dip into my shrinking pile to pay.

 

[NW-Bound]

Early today, I saw that tech stocks came back to life and the NASDAQ was green. I was able to sell one November out-of-the-money covered call contract on an ETF, and got $510 cash for that. In hindsight, should have done more than just 1 contract of course.

Went to my backyard to continue some work, and went back inside before market close to see everything in the red again. Darn!

The S&P call option I bought yesterday? It lost 40% of its value already. Darn!

So, I bought another call option, also at the strike price 2% higher than current value, expiry Jan 2019. Will see if I am going to lose this bet too.

Just playing with a few hundred bucks here and there, while the market god blew away hundreds of $K off my Quicken screen...

 

[LOL!]

For some reason I got really busy today doing some other things which probably saved me from buying more shares early in the day. I will try to buy something tomorrow because I like to lose money.

 

[LOL!]

With things up 2% to 3% this morning I'd like to be selling. Unfortunately, I don't have any profits from buying two days ago since yesterday things were down about 2%. I'm back to about even and ready for the next drop. 680

I'll be on an airplane this afternoon, so no updates later today.

 

[NW-Bound]

I have been back in the mode of writing out-of-the-money covered calls again, now that the market has risen for two straight days.

I will keep collecting a couple of thousands here and there. It is nowhere near enough to cancel out the total drop from the portfolio high-water mark, but that's spilt milk.

This time, if the options get assigned and I have to sell the shares, I will keep the money in cash instead of plowing it back into the market or selling put options to buy them back. I am gonna drop my stock AA down from 70%. I swear.

 

[LOL!]

I have been on the road for a little while, but have been receiving alerts on my phone every now and then. Yesterday, the alerts coincided with me having access to the internet, so I bought shares of MTUM just before the market close because I already own it and it had dropped about 3.8%.
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