Yes, but it needs to be in perspective. So far I only have one tranche of ES that I'm selling covered calls on. That is about 35% of the portfolio in notional terms. I am willing to add another unit of ES at that short put strike. So it's not like I'm already all in and getting leveraged. This is why my portfolio's vol is so low relative to a 60/40 generic portfolio.
Do you hold cash or bonds with your unallocated portion? How do you tell if this way of averaging in is better than just holding SPY since you are doing more work.
Just hold cash. My goal isn't to beat SPX every year but to consistently make 10-20% annually with low drawdowns. It's why my benchmark is a balanced global allocation of stocks and bonds.
Not part of the regular scheduled programming, but I wanted to see how well my portfolio has held up during the recent "correction." This is before today's rally. Blue line is me and green is a 50/50 mix of global stocks and bonds. Good to see that I'm on track and the strategy is doing exactly what it's supposed to in times like this. There is now a Washington consensus to contain China and disallow it to become a global power. By giving up on Afghanistan haphazardly, America has created instability on the doorstep of western China. America also frees up additional resources to pivot to China, something started under Obama and continuing with Trump and Biden. For those paying attention to Europe, America has essentially subcontracted the defense of EU to France. Expect them to be the focus of NATO against "Russian aggression." The big question for betting folks: do we have civil war in the US first between coastal city elites and the deplorables or WW3 with China and Russia first? I will be taking this opportunity to learn some farming and hunting skills plus buying land in more rural areas in southeast United States. Always good to pick up some skills even if you never have to use it.
Can you separate the covered call programme and tell if it significantly improves your sharpe over the long term? I would guess it stunts the Sortino ratio.
My overall strategy is to use my macro analysis to estimate what delta puts I'm comfortable selling. When I get assigned, depending on my outlook, I sell certain delta calls against my long ES position while selling another otm put at a price that I want to add at. I tried taking out the CCs for a year and was not comfortable with it psychologically. The returns were better, but not after adjusting for risk. This is typical with strategies that are essentially shot vol (selling premium).
2 charts today. First is how the current broad market drawdown is affecting my portfolio. Blue line is me, green is a global 50/50 stocks/bonds benchmark: Big takeaway is how close I am to making all time highs. B/E is now 4390.5 after selling the 4400 calls expiring Monday. Still holding good ole 1 ES. Chart is slightly off the mark since I'm bagholding about 6k of some shitty penny stock that keeps tanking day after day. I may have made a slight ATH already otherwise, but it doesn't really matter. Second chart is my performance since beginning of the journal: Takeaway here is that I am meeting my overall goal, which is to beat a balanced passive portfolio on a risk-adjusted basis. Since my b/e is close to where ES is trading, I can go back to selling the Mon Wed contracts while still collecting decent prem. Let's hope that continues as I'm still overall bullish for rest of the year.
My covered calls expired worthless again. Sold the Fri 4395 calls for 13. New b/e is 4377. Went back through my numbers and realized I made a marginal ATH on Oct 7th. It wasn't reflected in the graphs since I'm (bag)holding a small stock position that's taking daily dumps.
Full steam ahead, above previous ath, sold the 4420 put exp Mon and 4455 put exp Wed. Up around 3k for Sep and Oct and hoping to hit 10k profit for these 2 months. My previous outlook still holds: grind higher into year end.