Hab Technology

Well that was a ripper of a month. The nasdaq went up 12.5%:

but is still down over 20% YTD:

Big tech mostly reported this week, including AMZN and TSLA (is tesla considered big tech?). AMZN ended the day 10% higher, which put my short put positions full OTM, or on track to expire worthless.

So my portfolio as well gained ~10% this month, and I’m now up YTD $10k, or 2%. Not amazing on absolute terms, but considering the nasdaq is down 20%, 2% is 22% out-performance of the nasdaq. I don’t think this can be attributed to luck, rather the opposite. And honestly, I admit to being nervous about the market and the future economic outlook, so much so that I didn’t deploy much cash/take advantage of the opportunities which arose. I was busy in survival mode, when I could have deployed even small amounts of cash on low probability-high reward positions, which could have paid off big if I was more level headed and less scared, because honestly everything about my profile was under control, which is especially good considering this first half of the year was the worst of the last 50 years.

So I have a couple of takeaways from this year so far:

1. As beaten down as AMZN had gotten over the last half year, its not disappearing. And granted, I made a lot of money off them, but I could have made more if I had opened an earnings BCS/butterfly play. Or honestly a butterfly any time in the last couple of months when the market was at peak fear and AMZN was trading below 120. It was a matter of time before they recovered at least a little.
2. It is important to raise your bets as the market gets beaten down. This is especially true if you want to outperform. This is also why its so important to keep cash on the side. To deploy when the market is low/the VIX is high. And then its the eternal question of when is low enough and time to deploy, and when is it not time yet? And if you have already deployed, when is it time to take some profits so you have some more to deploy on a downturn? And that brings me to my next point:
3. I haven’t really made many trades over the last few months.. Just rolled my expiring positions out in time and down in strike where relevant. Since May 1st I made less than 30 trades, the majority of which were adjusting and rolling AMZN positions… So why my porftolios good performance? It all comes back to selling time premium. While the market can go up and down, time only goes in one direction. So selling time premium (when done correctly) is a sure way to make money in all markets. Yes, even in the worst market of the last 50 years, and my porftolio is proof of that.

But honestly, where are we going from here? Who knows.. We’re really just back at end of may highs, its not like were back at April highs, and were nowhere near December ’21 highs… Not that I expect us to necessarily get back there any time soon, but who knows? We also could go back down to June lows. And thats the strength of my investing strategy… It doesn’t really matter. Ill probably take some profits this coming week, just so I can feel more confident deploying cash later on if we do go down from here, but honestly going over my portfolio (like I did last time here), I’m quite comfortable with all my positions. And honestly if the nasdaq stays in the range of 11,500-13,000 (June lows to where we are now) for the next year, my positions will just make money as the time goes by. I don’t need for the market to go back up to Dec 21 highs in order to continue making money, I’m perfectly content to stay here.

Just to stay up to date, these are my executed trades from the last 30 days:

From the bottom (oldest) to the top:

AMZN – rolling short 125 puts to 122.5 puts for 2300$ credit

NFLX – an earnings play – sold a short put 2 years out and bought a bear put spread to cover in case they tanked (again) on earnings for a small credit. The earnings play failed, the BPS expired worthless, but the short puts are on track to expire worthless as well (in 2 years), so, overall a failed play but will still make 300$ if NFLX stays above 100$ for the next 2 years (now at 230$).

IBM – Just a short put 2 years out.

VIX – This is a hedge, I bought a 25-30 BCS, so if the market goes back down hopefully this will offset some of my paper losses, I can take profits on this spread, and then wait for time to go by as the rest of my positions make money. Its a 5$ spread which I paid $ 1.5 for, so I can also double down and roll down if I decide to. Max loss here is my initial debit of 700$, max gain if VIX is above 30 on Aug expiration (unlikely) – 1800$.

AMZN – rolling the short 122.5 puts out to Sept 120 puts for 1000$ credit – I was nervous about earnings, and figured while amazon was high I might as well roll out another month to give AMZN some more time to recover if they drop back again on earnings.. Turned out this was unnecessary, but also doesn’t hurt to pocket another 1000$ to wait another month for the puts to expire.

V – I had an old, double covered BPS on V, which I closed. It was a 140-130 DC BPS, so as long as V stays above 130 it will expire worthless. To be clear I’m not worried V will drop below 130$ (I hope it does so I can load up the truck with them), rather I noticed there are more efficient ways to sell premium than the LEAP DC-BPS. I sold some regular puts on V a couple of months ago which are already 33% green, so I figure if the market goes down a bit and takes V with it, I’ll add to that position.

Thats it for the month, hopefully August will be as successful. I’m currently feeling slightly underinvested (except AMZN), so I will be looking to reduce AMZN exposure while increasing other big tech exposure on market weakness.

Ill end the post with the graph of my portfolio vs index performance, not sure if its 100% updated to the day but this is the general idea:

Have a great week!