March 20th, 2020 Options Expiration Results

The Covered Calls Advisor continues daily tracking of coronavirus cases and the impact on financial markets.  New cases continue to increase daily in the U.S.:

Also, several projections today have estimated 2 million new unemployment claims could be reported by the U.S. Labor Department at their weekly update next Thursday morning.  This possibility is shocking and will likely cause further declines in the stock markets.  So today, transactions were made in the Covered Calls Advisor Portfolio that further reduced exposure from the already low 25% stocks/75% cash to 13% stocks/87% cash now.  I am primarily a fundamental/value-based investor and as such current available cash will be deployed into new investments more aggressively when U.S. daily new cases in the U.S. (see chart above) show signs of plateauing. Technically, it is generally best to wait for two consecutive solid “up” days in the stock market before adding exposure, and that hasn’t happened since February 12th.

The S&P 500 has declined by 32% from the market top last month but the Covered Calls Advisor Portfolio has declined by only 6%.  This is the result of two primary reasons:

1. The inherent advantage provided by Covered Calls since the income received from the Call options provides downside protection and was further enhanced by selling at moderately in-the-money strike prices (since the Overall Market Meter outlook of the Covered Calls Advisor is Slightly Bearish); and 
2. Maintaining the majority of the total portfolio in cash/money markets during the past month has provided additional protection to the overall portfolio's results.

The Covered Calls Advisor Portfolio held March 20th, 2020 Covered Calls positions in four equities -- Bank of America Corp., Diamondback Energy Inc., Merck & Co. Inc., and the SPDR S&P 500 ETF (SPY).  Early in today's trading, with the market near yesterday's closing prices, the following actions were taken:

• Bank of America Corp. (BAC) --Closed out the two 500 shares Covered Calls positions by simultaneously selling-to-close the 500 shares and buying-to-close the 5 Call options
• Diamondback Energy Inc. (FANG) -- Closed out the 300 shares Covered Calls position
• Merck & Co. Inc. (MRK) -- Rolled out from the March 20th $75.00 to the April 17, 2020 $65.00 Covered Calls when the stock was trading at $71.56 
• SPDR S&P 500 ETF (SPY) --Closed out the 100 shares of one Covered Call position.  The other March 20th $235.00 Covered Call position was rolled out-and-down to the April 3rd, 2020 $220.00 strike price.
• Boeing Co. (BA) -- Bought-to-Close out the two short April 17th, 2020 $90.00 100% Cash-Secured Put options.  A small gain was obtained since these Puts were initially sold at $17.80 per share and bought-to-close out today at $16.70 per share. 

Current positions are shown in the right sidebar of this blog.  Daily monitoring will continue and future transactions will be detailed on this site the same day they occur.  Please consider writing me at the email address shown in the right sidebar with any comments or questions.

Best Wishes and Godspeed to All,
Jeff