Here's what I didn't change this month. I maintain my long puts against LMT (hedging the defense bubble) and IYR (hedging the housing sector).
I also maintain my long holdings of GDX (gold sector bull), FXI (China bull), TDW (energy services bull and compelling fundamental value). My covered calls on each expired unexercised and I refreshed them. I also sold short puts under those three securities. If they remain range-bound, I keep the cash. If they drop in a flash crash, I pick up more of what I like at a discount.
Here's one significant change. For the first time in over two years, I wrote a small number of short puts under EFA. I do not have a long position yet in EFA but I'm willing to risk acquiring some. I don't mind a Euro currency crisis or Asian capital controls as the trigger. I consider EFA to be a way to own non-U.S. markets I can't track myself. I'm not quite ready to take the same approach with SPY because I'm waiting to see whether a bond market dislocation puts the S&P 500 on sale.
I didn't add much to my fixed income holdings other than buy a one-month Treasury with my cash proceeds from selling options. The sickeningly low yields on Treasuries reduce the effectiveness of this yield-enhancement approach. I just need to stay in the habit of rolling cash into F.I. It will pay off when interest rates rise after the U.S. is forced to live within its means.
I also maintain my long holdings of GDX (gold sector bull), FXI (China bull), TDW (energy services bull and compelling fundamental value). My covered calls on each expired unexercised and I refreshed them. I also sold short puts under those three securities. If they remain range-bound, I keep the cash. If they drop in a flash crash, I pick up more of what I like at a discount.
Here's one significant change. For the first time in over two years, I wrote a small number of short puts under EFA. I do not have a long position yet in EFA but I'm willing to risk acquiring some. I don't mind a Euro currency crisis or Asian capital controls as the trigger. I consider EFA to be a way to own non-U.S. markets I can't track myself. I'm not quite ready to take the same approach with SPY because I'm waiting to see whether a bond market dislocation puts the S&P 500 on sale.
I didn't add much to my fixed income holdings other than buy a one-month Treasury with my cash proceeds from selling options. The sickeningly low yields on Treasuries reduce the effectiveness of this yield-enhancement approach. I just need to stay in the habit of rolling cash into F.I. It will pay off when interest rates rise after the U.S. is forced to live within its means.
