The RUT has been on a tear breaking to all time highs (1293) while we entered at 1210-1220. This has put pressure on our RUT MIC trade and it’s sitting at break-even right now. I’ve been very diligent removing call spreads as we move up and I am happy we’re at break-even given the large move up which this trade hates. We’re in only 2/3rds unit as I couldn’t get a good entry for the rest. We’ve got about half the call spreads off now. We still have some upside pressure but I expect the RUT to cool off around 1295-1300. I don’t doubt that by the end of the year, we’ll hit 1350 but not right now. The big up move is likely due to the negative headlines and increased short pressure which tends to fuel these V recoveries.
The SPX has been lagging while the RUT is leading. The SPX MIC trade is doing well up about 2.5%. As with the RUT MIC, we’re only 2/3rds entered this month. I just couldn’t find good entries after that fantastic last month.
Overall both trades combined are sitting at about 1.5% with 14-20 days left in the trade. I wouldn’t expect much more than 4% for this month.
The protector alpha portfolio is doing fantastic due to some great picks in the healthcare/insurance sector. There’s been buyout rumours which have fueled huge runs in AET, CI etc. I held CI which had a 30% run (just sold) and I currently hold AET and UNH. The protector is up about 5% for the year vs SPY up 2.6% and we are fully hedged! I leverage this at about 6-7x because of its low risk fully hedged nature. So for that, I am up 30-35% on equity less whatever the margin costs are.
So far the year is going very well, my account is at all time highs and I am expanding my options education. I never thought I could be so challenged w/ options as I am with the new material I’ve been learning via John Locke (M3, Bearish Butterfly, Rock and specifically the M21 trade). These are all non-directional theta based trades that are more or less based around the same concepts the MIC is but quite a bit more complicated. Looking forward to implementing these strategies in the fall as a nice diversification to the MIC and protector alpha.