Now that I am back from vacation, have a reliable internet connection and have resolved some Yahoo download issues, this Post will bring members up to date on transactions within the Hawking Portfolio resulting from the expiration of January Options on January 17.
January 17 was also the scheduled date for a monthly review of the Hawking Portfolio, so the first thing I did was to run the Ranking Spreadsheet to check the ranking of assets held in the portfolio and their positions relative to SHY. The only ETF performing worse than the iShares 1-3 Year Treasury Bond ETF (SHY) was the SPDR S&P Retail ETF (XRT). Although the price of XRT was still above the 195-day EMA, it had fallen below both the 13 and 49 day EMAs and the 13/49 EMA "Golden Cross" was suggesting weakness (i.e. had turned red with the 13 day EMA falling below the 49 day EMA). As a result of these observations I chose to sell 160 of the 165 shares held (keeping 5 shares in case I need these to calculate an ITA Index). No Options had been sold against XRT so the sale resulted in a small loss (160 x (80.44-83.21) = -$443.20).
iShares MSCI Germany ETF (EWG) had performed well during the month and I had sold 9 Call Options at the $31 Strike Price to bring in 9 x 100 x 0.25 = $225 in income. Since EWG closed at $31.39 the Options were exercised, so I was obliged to sell 900 shares at $31. Since my purchase price on these shares was 30.18, my profit on this position was (900 x (31.00-30.18) =$738 plus $225 from the sale of the Call Options for a total of $963 or ~3.5% in ~30 days. Selling the $31 Options could be seen as costing me 0.14 per share in potential profit, but "potential" is the key word here and EWG has since dropped back to the original purchase price - so this can't be considered a bad outcome. I currently have 60 shares of EWG remaining in the portfolio.
PowerShares QQQ Trust ETF(QQQ) closed at $87.88 on January 17, below the $88 Strike Price of the January Call Options sold. This means that I continue to hold 335 shares of QQQ and keep the (3 x 100 x 0.41 = $123) income generated from the sale of the Calls. On January 21 I sold 3 contracts of the February 90 Calls at 0.56 to generate an additional $168 of income.
The final ETF holding in the Portfolio is The United States Natural Gas ETF, LP (UNG), which has had a wild ride recently. UNG closed at $20.88 on January 17, well below the $23 Strike price of Options sold for 0.45. This resulted in the portfolio keeping the (11 x 100 x 0.45 = $495) income generated from this sale. Since (at the time) there hadn't been a lot of movement in the price of UNG, on January 21 I sold 11 Contracts of the February $23 Call Options for 0.50 to generate an additional $550 in income.
As of January 30 close the portfolio is showing a profit of ~$2,500 (including Options trades) and the performance of the Portfolio (excluding Options trades) is as shown below.
The difference is due predominantly to the reduction in unrealized profits in UNG due to the sale of February Call Options.
The Hawking is presently holding a little less than $45,000 in cash and is underinvested/overhedged. However, over the upcoming weekend I will be re-running the cluster weighted spreadsheets and will likely add new positions next week. I will post the results of my re-analysis as soon as they are completed.