Liverocket Portfolio - Updates

Uggh. Sorry about the eyechart. Please click on it to see the details.

My intent is to review the portfolio and performance monthly. We had a lot of trades this week, so this is intended to capture and update the portfolio.

Sold DSX and MGM Puts. Took a small loss on the DSX (got bottom-ticked) but the MGM wsa a sweet return. The proceeds are not yet added to the cash position.

Bought a slew of Calls. From a trading perspective, I am wondering whether to exit next week if there is a short squeeze spike or whether to wait a few months. I may leave BIG if I don't see them grabbing market share a la Walmart.

Planning on exiting AGN Puts ASAP and possibly adding to ETFC. The AGNs expire next Friday and I just don't see them crashing. I will set an order to sell at $5 and watch every day. If it doesn't bite by Tuesday, I will make a different decision.

ETFC is crashing with the banking sector and I see myself averaging costs down. If I look out 1 year from now, I see the sector bouncing back a bit. Even a return to $5 would be meaningful. This is a speculative move all the way, but it assumes that ETFC is fine from a liquidity standpoint.

In general, I am pleased. To be in positive territory in a major Bear market is a good thing. I do not feel comfortable with STOP orders as we head into earnings season, but they will return in mid-August.

The long equity positions are mediocre right now. The calls, however, are doing well. (The TRID calls are old and a major speculative play that is not paying out...yet.) This week's purchases were a short term play in response to short term volatility. I felt that this was a pullback driven hard by technical issues (hedge funds selling to get cash and triggering automatic sale orders). With volatility of this nature, options are the best way to maximize gains. If I am correct and these stocks return to their highs and go even higher, we should see some nice returns. Otherwise I would much prefer to own the stock.

In looking at the call value, note that I use the Bid price (what we would get if we sold) and not the Ask price (what we paid).

Also the Call positions are less than the Puts ($27K invested in Puts vs $22K invested in Calls). Several reasons:

1. Options exposure is high: 33% of total portfolio value. That's about 3X what I normally want, but understandable given the opportunities

2. Calls feel riskier. Chinese response to Western slowdowns is the wild card for commodity demand. However, dollar weakness may counter Chindia weakness. Friday's IndyMac, Fannie Mae & Freddie Mac implosions simply raise US Government obligations and stress the value of the dollar.

The short positions are also doing much, much better. The Ultrashorts are essentially breakeven (yeah, we got in too soon). The Puts are doing very well, even excluding the MGM returns. As I mentioned about 2 weeks ago - the leverage here is so significant for the portfolio that a swing up or down makes a big difference. At the moment, the stocks are swinging in the way we want, and another few dollars down for each stock will generate handsome returns.

Some of the results still puzzle me: HOG and ZLC should be down so much more. At the same time, I feel lucky with NKE. The loss could be much, much higher.