The NAV breaking $12.00 also means our YTD return finally break the 20% barrier. We are now up 20.45% since Jun 1st. If we continue at this pace, our annual reaturn by next Jun will be 47.24%. Not too shabby.

The next stage is to generate ~20% return for my mom and my girlfriend’s portion of the fund. Once we successfully do that, we will open up the fund and help more family and friend invest and build wealth.

pharmaceuticals:
“There will be noise about Medicare getting to negotiate drug prices like the Veterans Administration, as a consumer that’s good, but as a shareholder you want as little competition as possible,” said Barry Ritholtz, fund manager at New York-based Ritholtz Capital Partners.

discount retailers:
“We’re certain to hear noise about the minimum wage that can impact everyone from Wal-Mart to McDonald’s ,” Ritholtz said.

The down side to having very safe positions is that we will not be maximizing our reward. But after suffering from our first loss of the season last month, it is probably best to slow things down and refocus on minimizing risk before we start trying to maximize profits again.

From a technical point of view, it is also not a good time to establish a new position. The risk and reward ratio is poor because the 3 month up move has removed much of the volatility in the market. Additionally, the high slope of the upwards trend would require us to establish a stike price that is far out of the money, resulting in very little reward on the upside. On the down side, there is very little support as many of the short sellers have been forced out of the market to cover their positions.

There are 3 likely outcomes for our Nov position.

1. The market will correct from here (1366) and will realize $1118 of profit. Statistically and technically, however, this is not a likely outcome.
2. The market moves above 1375 but does not pass 1400. In this case the Sep 11th trade would cost us about -$1000 while the Sep 21st and 25th trade would gain $772 for a net loss about $230.
3. In the worst case scenario, the market would past 1400 by Nov 17. In this case all three Nov positions would suffer a loss in the $4000 - $4500 range.

The current EV of the Nov position is -472.35. Yikes!
The delta is -76.74.
The combination of high risk in our portfolio and low volatility will likely prevent us from establishing a Dec position until one or both factors improve.

NAV: $11.78
YTD%: 17.77%
Annualized: 47.33%

Q: European or American Exercise?
A: European exercise - this means that the option may only be exercised on it’s expiration day. This is different than American exercise options, where the options may be exercised at any time.