Wednesday, August 12, 2015

Sold Long Position in ProShares Short S&P500 Index

Today, the Covered Calls Advisor sold the remaining half of the the short position in the S&P 500 (ticker symbol SH) that was established in December 2014.

As shown below, 500 of the 1,000 shares in ProShares Short S&P500 Index were sold on January 15, 2015 and the remaining 500 shares were sold today.  The overall result was a +1.2% absolute return (equivalent to a +1.9% annualized return-on-investment) for the 236 day period.  The overall results for this position are detailed below.

This position was established based on the Covered Calls Advisor's perspective that the U.S. stock market is overvalued and that a profit could be made by going long on the inverse ETF for the S&P 500 index.  The resulting profit from this position was only minimally profitable, which simply confirms my long held belief that trying to predict the short-term market trend is not something that can be done accurately on a consistent basis.  The lesson learned is to follow my own advice as highlighted in my investing motto which is "Stick with Covered Calls".  

Sold ProShares Short S&P500 Index (SH)
The transactions were as follows:
12/19/2014 Bought 1,000 ProShares Short S&P 500 Index (SH) Shares @ $21.68
01/15/2015 Sold 500 SH @ $22.35
08/12/2015 Sold 500 SH @ $21.28

The performance result (including commissions) for this Short S&P500 position was:
Stock Purchase Cost: $10,848.95
= ($21.68*500+$8.95 commission)

Net Profit: $135.00
= ($22.35+$21.28)/2 - $21.68)*1,000 shares

Absolute Return: +1.2%
= +$135.00/$10,848.95
Annualized Return: +1.9%
= (+$135.00/$10,848.95)*(365/236 days)