A Word On Paper Losses

Lately, more and more people have expressed concerned about the down turn in markets and the viability of continued profits through ETF Covered Calls and I think too many people are missing the point. Here’s what my aggregate portfolio looks like right now:

Arbitrage Account:

  • Own 800 XHB @ average cost of $21.26 (400@22.72, 400@19.80) current XHB @ $18.81 for paper loss of -$1,960.00
  • Own 400 DDM at cost of $74.30. Current DDM is at $70.86 for a paper loss of -$1,376.00

Mini Account:

  • Own 200 DDM at $77.80, DDM is at $70.86 for a paper loss of -$1,393.00

Power Account:

  • Own 1000 DXD at $60.61, DXD at $56.05 for a paper loss of -$4,360.00
  • Own 200 QID at $46.75, QID at $38.78 for a paper loss of -$1,592.00

These losses don’t include any profits made by shorting but if you add only the losses all up, it adds up to a little over $10,600 in paper losses. Am I in a panic about it? No, because markets don’t move up in a straight line just like they don’t move down in a straight line. Corrections will happen periodically and the point of the ETF Covered Call strategy is to be quasi long and short along the way to profit from the short periods.

Right now, I am VERY tempted to add more to my XHB positions (XHB July $19 strikes are trading at 5.8% premium right now) as well as go heavily into DDM as the Dow will inevitably pop sometime between Monday and a point in the future. What is that point in the future? I don’t know, it may be a week, or a month or a year but I know it will correct and pop back up. We have two more weeks before June Expiry and anything can happen during that two week period.

Lastly, if you have short term needs for the money you’re investing, DO NOT USE those funds for this trading strategy as market downturns can happen rapidly and unexpectedly.

ETF Covered Calls website is for educational and entertainment purposes only. Any investment activity is not without risk including loss of principal. Neither this website nor its authors assume any responsibility arising from the use or misuse of any information presented in this blog. You are urged to contact a financial adviser before making any investment decisions. Past performance is no indication of future performance.

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