February 2017 Update

IMG_20150815_181327General Comment
Another pretty good month for the markets in February, compared to last year there is certainly a different pace with 2017, at least in these first two months. I think that the rollercoaster will begin soon though, Europe will go through a patch of general elections, and that it’s going to fuel instability in the Euro area, FED announced more interest rate hikes, so maybe the time has come to start buying dollars and T-Bills? Time will tell.

LH FUND

TR stands for Total Return (what selling everything, paying taxes and commissions and converting to euro would mean in terms of return), YoC is Yield on Cost (what my investments have returned to me via dividends/options), TER is Total Expense Ratio (commissions + taxes).
Total Return is not something I am particularly concerned about at this stage (plus it’s an estimate as I have calculated potential taxes and commissions in it), it’s highly affected by the way the market behaves especially in a young portfolio such as this one. But it’s a metric that it’s worth keeping an eye on. YoC is on the other hand more interesting to me, as that is what the PF has produced over time, my target is to reach the 2% x year net mark (by net I mean YoC-TER).
Month TR TER YoC
11.2015 0.00% 0.00% 0.00%
12.2015 -3.33% 1.27% 1.13%
1.2016 -1.52% 1.39% 1.40%
2.2016 -1.52% 1.38% 1.43%
3.2016 -0.27% 1.48% 1.57%
4.2016 0.73% 1.56% 1.86%
5.2016 1.32% 1.71% 2.37%
6.2016 2.57% 1.90% 3.45%
7.2016 2.61% 1.96% 3.69%
8.2016 4.17% 1.99% 3.96%
9.2016 3.74% 1.97% 4.10%
10.2016 3.20% 2.01% 4.56%
11.2016 4.21% 1.96% 4.15%
12.2016 7.06% 2.01% 4.75%
1.2017 4.76% 2.04% 4.93%
2.2017 7.26% 2.20% 5.25%

February 2017 sees the new record in terms of TR, beating December 2016 by 0.20%. I have to say that it all happened in the space of a day, because of the market’s rally on Wednsday 1st March. No complaints and let’s keep going on. Options Yield has finally surpassed dividend yield, that’s how it has to be as the risk profile is much higher, I expect this percentage to grow at a faster pace in the future, my target is to hover around 10% with the option returns. TER has risen because a first block of tax related costs (paying an accountant to do certain calculations) has hit the fund, there will be another important hike in June or September when tax returns are due.

Dividends and Options

If January was a  dreadful month, at least at the start of it, February was a much nicer one, mostly because some gridlocked positions are finally coming to their end, freeing up much needed capital gain. The result is a good 863 Euro worth of options gains, easily becoming the best month in the year so far. Options yield jumps from 2.40% to 4.58%. Dividends also played their part with a great 383.75 Euro tally, 48% increase compared to 2016. Clearly the sum of the two brings YoY comparison a bit out of scope as I wasn’t selling options one year ago, but it also shows the potential that this instrument holds.

DCA/Increased Positions

None to report

New Positions – Sold Positions

None to report

Options Plays
Options plays are strategies that I put in play with some stocks where I want to “trap” a dividend and sell the stock immediately after. It doesn’t always work, so sometimes you get to keep the stock for a longer time.
Plays are still in “play”, so no action this month.
Conclusions
February has been gentle, some panic driven sales allowed me to rack some profit with options but generally it’s a difficult market to enter right now. It seems that everyone is on their toes waiting for a massive shock to hit, hence all negative reports (see Target at the end of February) are amplified by the market with very steep sales and equally rapid growths. Need to start studying the bond market as I believe that some opportunities are coming up at the horizont.
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17 thoughts on “February 2017 Update

    1. Ciao IH,
      Cannot complain about the result, of course it should be compared with less fortunate months (Nov 2016). With the new accounting system that I have in place only “closed gains” are reported.
      Thanks for stopping by!
      Stal

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  1. ciao Stal,

    impressive result! congratulations on your yield in trading options! 🙂
    keep it up!
    sorry for not texting in the last days and weeks. I was very busy, hope this will end soon.

    best regards
    Chri

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    1. Ciao Chris,
      Actually I have also been terribly busy and could not do much. I hope that after March things get better a little because I am getting very very tired! As to the result I am of course quite happy, there are still a lot of positions that I am trying to manage out of bad trades, but little by little I hope to clear them out, I managed to do some cleaning this month and of course that freed up a lot of capita!
      ciao caio
      Stal

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  2. Great results. Your system starts to do good things.

    How do you calculate the option yield? I look for a metric as well.

    I planned to use gain in a month compared to the average capital. I M not sure to take calls into consideration… Maybe only puts…

    Liked by 1 person

    1. Ciao ATL,
      I am actually studying a new method of accounting, as at the moment I calculate the capital “in play” each week and I compare that to the result that I have had so far.

      There is a flaw with that system of course, the time I don’t invest or there is a fall in capital deployed the yield rises massively and that’s wrong. So I am now working on a system that takes into account AVERAGE days in trade (the average of all my closed trades), AVERAGE capital requirement (of all closed trades) and gross result from closed trades. With that I should get a more accurate number, although I am not a great fan of averages, I cannot find another method… If you have other ideas please shoot them along this alley because I cannot find other methods… 😛
      Ciao ciao
      Stal

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      1. My thinking is along the same way. I did a test yetserday. Since june last year, I write down each day my capital in play for put options. From that, I get my monthly capital in play. This is compared with my monthly result. I can get a monthly return.
        Very volatile results.
        So, I did the same on a 8 month basis… I will post on it soon. I was a little disappointed with the results of my trading.
        I have another experiment running where I write near the money puts on DGI stock I would like to keep in portfolio. I will track each month the results.

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      2. Made the first test, results seem correct so I have updated the formulas… Of course at the beginning I had stellar returns, but not so much capital tied up in rolled options. I am sure that I can get those figures to be better in time, especially when the rolled options start to expire. 😛
        Interested in the new experiment, keep us posted there!
        Ciao ciao
        Stal

        Liked by 1 person

    1. Ciao Vivienne!
      I WISH!! 😀 1300 USD is only this month, right now I have not reached a stable output, so moving to the Caribbeans is not on the tables at the moment, but I am seriouly thinking to pull the plug of “working like a dog” and start enjoying life more… 😛 We’ll see… thanks for stopping by!
      Ciao ciao
      Stal

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  3. Looks like your Feb. totals came in at a very respectable amount. Dividends/options premiums really came in nicely and a serious year over year change too. Looks like you are doing all the right things. Keep up the good work!

    Liked by 1 person

    1. Ciao DH,
      This is an important year, first of all because I am not planning capital additions to the fund and secondly because 2017 is up against a “full year” (actually the first “full year” with all capital deployed that was 2016.
      I did not have options back then, so I am expecting a substantial growth in 2017, but dividends might not be growing Y0Y too much as there have been some changes to the composition of the portfolio. We’ll see what happens, but the plan is set and this is the important part… 🙂
      ciao and thanks for coming!
      Stal

      Like

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