Captain's Log: Stardate, Feb 23rd, Sunday night at the movies. 'The Day of the Vix' Holy $(%# hell. What a rough ride of volatility this week. To begin with, the NetFlix trade kept going against us. It was then decided to roll at the earliest as possible, before some wookie decides to exercise early on their long-CALL. With markets closed in both CA/US markets on Monday, I had to wait until Tuesday. I did so with caution as it was the first time using the IBKR 'roll' tool. Supposedly, this was how the professionals do it, but I cringed anyway trying it for the first time. Oh, it rolled us out and up alright, but gave us an immediate fill. I was pretty surprised to get an immediate fill, and figured something was wrong. After checking, I saw for some reason, it ripped us off by 2-points from the most expensive price we should have paid. @%)@ I'll have to do some more work on that later to see what the hell happened there. To add insult to injury, Netflix fell out during the market sell-off on Friday. Making the whole roll thing pointless. Doh! And to further add to drama, part of the market sell-off, was due to this little thing... nothing but... ohhh, it just happened to be the biggest amount of Ethereum stolen from an exchange of ALL TIME! We are talking in billions here. Thanks ByBit! Miners sold off which had nothing to do with Ethereum. Needless to say, we got assigned on our Bit Digital, right on the LAST day! What incredible timing. Navicomputer: As can be seen with NutFlix (NFLX), after rolling out of danger, the market later plunged. I decided to close THAT rolled trade out as well to lock in a profit. The good news, is this still netted a $500 win, but had I simply just used my oracle to let the trade expire all this time, I would have kept 3x that amount due to the original premium. Adjusted Cost Base: The Ethereum (ETHH.B) ETF trade was interesting. I had that one open for many days trying to get a fill, as I had too much ETH at risk. Then suddenly, someone swoops down and sweeps my contracts from me. They couldn't have had worse timing though, that's just when the poor bastard got wacked by the Ethereum Hack/Crash. Usually there is no getting around Murphy's Law, but it seems Murphy let me off the hook easy in order to screw someone else instead. I bet that poor bastard got margin called after levering up. Note of Assignment: 10 Lots of Bit Digital (BTBT) 7 Lots of BitFarms (BTBF) As can be seen from the historical records by the Imperialists. Vix spiked over 19 on Friday's panic. Options Inventory in Cargo Bay: What the inventory doesn't show you, is I also got cracked by another 20% crash in our Savers Value Village stock (SVV). Once again, Trudeau's waconomics ended up in another disastrous earnings report. Well, what else could a rational person expect? Cash-is-Trash-Inventory: Cash levels depleted quite a bit due to assignments and emergency evasive maneuvers. Risk Navicomputer: Historical 1-Day, 99.0% (CAD) VaR: $ 37,850 ES: $ 46,657 MonteCarlo 1-Day, 99.0% (CAD) VaR: $ 118,798 ES: $ 129,597 I really don't know what to make of this. I am accustomed to 'Historical' showing worse draw-downs than 'MonteCarlo'. Could it be IBKR is doing a wonky up-date right now? A glitch in the cosmos? I will have the crew run some recalcs on this in another 24 hours. Flight Plan: The plan, is to fly like I used to do in Beggar's Canyon. I will short calls on the newly acquired assets to lesson delta again. The question is, how much will they bounce tomorrow? And Wednesday we have nVidia earnings out, which could pop the AI bubble if sales have already dropped. I'm sure I've said this somewhere else in my reports! And then.... there is that 'tariffs' thing.
Two questions if you don't mind: 1. What is the duration of your typical LEAP? 2. You seemed to be doing short term trading with your LEAP, why using LEAP to do short duration trades and how profitable are you to date?
Oh boy. As for #1, I'm not fully sure as I'd have to do a lot of averaging up, lol. Since I don't have any python script right now, and not sure of any tricks to check something like this in IBKR, I'll just throw around some numbers. If I look at every option I deal with, maybe a 1-year or 1.5-year to expiration is the average? This would be pushed out a little further if not for the fact that some options on the underlays I like only go out a few months at best. So I'm limited there. On the other hand though, I've been purposely trying to break up many trades into smaller terms than a year because I don't want to have everything clustered around only certain months for expiration. Would be nice if I could spread things out more evenly across each month. At least in theory, but in reality it doesn't work out so much. Market has to co-operate, and there are earnings issues, seasonal swan events, etc... It can be a frustrating thing, like trying to stay delta-neutral. In theory it's simple and just works... in reality it doesn't work so well. As for #2, if I close out a LEAP much earlier than expiration, I have my reasons. Either forced to reduce leverage, or... if the market suddenly gives you a big win early, I've learned to TAKE THE GIFT. I'm not talking about taking tiny profits like some paper-handed rookie. I'm talking about a very significant amount of premium milked out of a contract very early into the trade. Why keep the capital tied up all the extra time to milk what's left? Not only is that not very efficient, but you're just asking for theta now to go more against you (when it should be in your favor). As for how profitable, well, I've definitely gone through some massive drawdown like everyone else... considering the mistakes of the Fed, and simultaneous blow ups of stable coins, FTX, etc, etc, etc. I've got to file my taxes soon, I can give an update on exact numbers around end of April since the CRA/IRS wants to know anyway. I have most my stuff logged into my records, but I still have more updating and fixes to account for. Takes a LOT of work, even with online forms to help track my cap-gains/assignments/splits/merges/exchange-rates/return-of-capital/etc... I think starting this week going forward, I'll try to give further updates on the tax situation. I'll also try to screen-shot my trading portfolio net liquidity for you on a time-line to see how well/bad it's been over many, many months.
Captain's Log: Stardate, Feb 28th, Friday after Market Close... 'Bitcoin Crash!' And so, it happened. I was about to rest in my private bunk on the ship last night, when I made the mistake to glance at the crypto markets. Sure enough, BTC was ticking down.. down... down.... until it crashed below the $80k barrier. At that point, I checked the old options-chain and made some plans to roll out some of my stuff for the next market open. Already some of my positions had plunged not one, not two, but three standard deviations at that point! As a sidenote, I had earlier in the week sold calls on Bit Digital (BTBT) to lighten the load of deltas ever so slightly. Navicomputer: I chose the same strike level of 3 to short the CALL for BTBT which I had been originally assigned at. To be fair though, when counting the initial premium, my ACB was quite lower than 3.0. CleanSpark (CLSK) really pains me here. Despite the blowout earnings, and all the positivity, this one keeps sinking like a rock in the market panic. It is shocking to see how a simple vix that breaks 20+ causes such an immediate reversal of extreme bullishness to extreme fear, that the babies get thrown out with the bathwater. Regardless, I am still worried of all this leverage, and decided to roll out.... far to buy time. I also rolled down a tick to minimize margin ever so slightly. And was able to also do so for an interesting profit. Quick sidenote: Buying back the initial short-put contracts realized a lousy $322 total in space-credits. But I'm not going to complain considering the alternative here. We'll have to revisit this contract by expiration early next year. But before then, we'll handle the other CLSK contracts set to end before then. Small steps for now little padawan... Current Options Inventory: What a shit-load of red (ITM contracts) we are showing now. Half of the very few teal contracts are only so because they are shorted CALLs. Next month still shows 10 short-puts on Ethereum that will have to be dealt with. Very unlikely there will be a v-shaped recovery in this asset any time soon, despite Cathy Wood just recently sold off Bitcoin in order to buy more Ethereum at the North Korean discount. Cash-is-Trash Account: Cash + T-Bills + Dividends = $ 108,638 Risk Navicomputer: Historical 1-Day, 99.0% (CAD) VaR: $ 159,098 ES: $ 173,229 MonteCarlo 1-Day, 99.0% (CAD) VaR: $ 122,468 ES: $ 134,901 Note: Historical VaR making more sense than last time we ran the numbers. I'm still trying to make sense of the under-risk reporting from a week ago. Flight-Plan: Now that we successfully rolled the front month's CleanSpark positions, next week I'll see about having the crew roll the Ethereum short-PUTs away from the front-month as well. Unless... there is a v-shaped recovery and I can get assigned near strike. But with the AI story coming to and end... and bag-holders have already switched from 'Euphoria' to the 'Denial' stage, and are well on their way into the 'Panic' phase at this point, this seems very unlikely. --- Last notes from the Captain of the ship: 1-Year Performance Chart: 1-Year Account Value Chart: I thought for sure I had to be crushing the indexes, but I find the first chart is a little puzzling/humbling. I'll have to do some deeper analysis here. Perhaps there's another glitch in the matrix again. Final Note: I'm starting to carry out audits on the ship's P&L for the year. Will post tax updates in the near future.
Captain's Log... Stardate: March 9th, Sunday during Globex Markets... "Tariffs and Remodeling Everything" Another roller-coaster ride this week as the gravitational waves slammed into the ship relentlessly. Crypto was not saved. Right now as I look, we are again back down to the 80K level, as front-runners were disappointed that Tax-Payers won't be funding active purchasing of crypto. So they've reversed their longs and are now shorting crypto in retaliation. We did carry out some more emergency maneuvers again to protect the ship. Navicomputer: We were becoming very much locked into a losing trade on the front-month Ethereum (ETHX.B) contracts. I am talking by standards of deviations. With still bad news of the tradewars growing throughout the galaxy, I decided to take control of the ship again and rolled the March back toward September. The price was fairly close (ignoring commissions), but I was able to drop the strike down a tick. For a while, I had wondered if the worst was behind us, so decided to add a tiny bit more Greenidge (GREE) to our stack. However, it would become apparent that the worst was and is still not behind us in this trade-war. Toward the end of the week, I had given up on waiting for Netflix (NFLX) to rally. So I finally shorted a call around lunch on Friday. Only to see moments later Netflix finally begin a large rally to the upside again (!$##$%@^$@^^^!!!). Cargobay Options Inventory: It would appear that the only thing I am safe on are the Galaxy short-PUTs. They are so far out-of-the money, that I will risk them going into expiration. I suppose the short-CALLs on Argo Blockchain are also safe, as crypto would have to go through a mega rally for that disaster to get called away. As the captain of this ship, I can only wish. Cash-Is-Trash-Account: Cash + T-Bills + Dividends = $109,915 Last week = $108,638 Change = $1,277 Note: Don't forget we bought a tiny bit of GREE. Risk Navicomputer: Historical 1-Day, 99.0% (CAD) VaR: $ 151,032 ES: $ 163,765 MonteCarlo 1-Day, 99.0% (CAD) VaR: $ 122,180 ES: $ 133,770 Flight Plan: The plan is to 'do nothing'. In other words, keep bleeding out that theta. No more buying fire-sale assets, no more risk, no more trades except to batten down the hatches. The trade-war is here, and this is already an over-weight freighter that's not outfitted for war with a full powder-keg. We've already realized enough gains for the year and last year. Time to play it safe. Let the bloodbath between bulls and bears in crypto play out in the meantime...
Captain's Log... Stardate: March 16th, Sunday... "The calm (during) the storm." Something seems very wrong this weekend. It's the first Sunday that I can remember in a very longgggg time that Trump hasn't made some 'tweet' right on Sunday afternoon that has jacked up the Vix Richter scale once again. Now I am left to question what the hell happened. It's like the TV show that suddenly got canceled for no reason. Navicomputer: On Sunday there was 'finally' a small rally in blue-chip cryptos. I tried to take advantage by finally getting out fifty covered short-calls on Ethereum (ETHX.B) before worries of the galaxy's coming recession tank the markets even more. Already this cosmos is in a correction this week. It's official now. One thing that wasn't so smart, is I had to cross over a 30% spread to get a fill. #%@% There needs to be a better way. I will have to re-evaluate Globex as a better candidate, but spreads are wide there as well. However, if it turns out I get burned on this trade, I'll be happy because that means the rest of my deltas will print space credits. Current Option Inventory: Again, lots of 'danger' red. I will need to get serous about rolling the next batch of ETHX.B out of the way once April becomes the front-month. I am still feeling foolish about shorting puts a while back on BitDeer (BTDR) at such an insane price. However, the premium did give a great margin-of-safety. But having both the escalating tariffs war on 'ALL' fronts AND the bursting of the AI bubble AND the worst ever Ethereum hack in history all at the same time was.... well... quite the Black Swan event. What an epic disaster. Not as much as the FTX era blow-up, but still enough pain considering there is quite possibly more to come before the bottom is in. Maybe this is why Trump is suddenly quiet this evening. Cash-Is-Trash Account Cash + T-Bills + Dividends = $112,530 Last week = $109,915 Change = $2,615 The change is primarily due to the Ethereum ETF trade. I am thinking more it may have been foolish to put a whole 50 contracts on the line just for a lousy 2.5K Cad per month or so. Especially in a non-liquid ETF. Risk Navicomputer: Historical 1-Day, 99.0% (CAD) VaR: $ 25,260 ES: $ 33,453 MonteCarlo 1-Day, 99.0% (CAD) VaR: $ 20,551 ES: $ 23,944 I refuse to believe these optimistic numbers again. They are too optimistic, and most likely off by a factor of 5. IBKR warns that there is a missing position, but investigation shows it is only a couple of US T-bills that shouldn't change much. That's what I get for using this piece of junk brokerage app, but she'll make point-five past lightspeed. Flight Plan: I'm keeping the ship grounded while trying to weather the storm. If this tariff war continues to escalate out of hand we may be lucky to live through it. At this point, I can't yet tell if time is on my side, or not. So for now, the answer is still to sit in the cockpit and do nothing. As for the next security to do some due diligence, that would have to be REX's Bitcoin Corporate Treasury Convertible Bond ETF (BMAX). It finally went live on Friday. I am going to be very cautious here, but plan to start with a very small position in one of the ship's registered accounts for now. Most likely I'll DCA a little more into it every 30-days while digging deeper into the financial engineering of this. For the record, this wouldn't be the first time I've had 'exotic' ETFs literally blow up and vanish on me. 3x levered REIT ETFs that imploded and delisted on me during the Covid wars were battle-scenes that I still like to forget they ever happened. https://www.rexshares.com/bmax/ Note: MER is slightly over 1%
Captain's Log... Stardate: March 23rd, Sunday... "A drop (of Galaxy Digital) in the Ocean." There are galaxies inside of galaxies. During the week the ship made one last run to unload our contracts of Galaxy Digital Holdings (GLXY.TO). The event was almost anti-climatic. And we were able to coast through the finish line doing only .1 past light-speed. There really is not much else to report for the week's flight log. Navicomputer: Onboard Options Inventory: Unfortunately, there are still a lot of contracts onboard with a net-bias to the 'long side', and what we closed out of the hold was more of a tiny drop in the galaxy. On April 2nd, the Imperialists from the 'dark side' may trigger the Death Star, so we'll have to once again go through a very bumpy ride in the universe. Cash-Is-Trash Account: Cash + T-Bills + Dividends = $112,481 Last week = $112,530 Change = $-49 I am surprised to see a negative for the change in net cash here. Perhaps there's another kink in this piece of junk. Granted, the value of of the T-Bills decreased this week, but the numbers are off by a factor of 10 here. And I haven't even mentioned the month-to-date interest yet. I'll have to keep a watch on this later during next week and possibly drill down into the flight-deck computer. Risk Navicomputer: Historical 1-Day, 99.0% (CAD) VaR: $ 25,327 ES: $ 34,797 MonteCarlo 1-Day, 99.0% (CAD) VaR: $ 20,308 ES: $ 23,885 Reallllllllly?! These are seriously off, as every tweet regarding tariffs on Truth Social has dropped the portfolio by 20 to 40 grand by market-open. Flight Plan: It's going to be expiration Friday again by the end of the week. NutFlix (NFLX) is already beyond a standard deviation under-water. I'm bleeding the theta by over a hundred a day on the contract, and will try to find a spot during the week to roll. Things will get very tricky as earnings are going to be coming up on the horizon. I may very well roll far beyond the earnings call.