This segment, the fourth in a six part series on creating, maintaining and managing a portfolio in a $50K IRA account, reviews the management of the portfolio so far and the performance of the portfolio overall and in comparison to the S&P 500. We also made another adjustment in light of the market’s behavior.
Our original portfolio was constructed using diversely correlated products. This enabled us to take advantage of inflated option premiums. By adding options we also lowered the cost-basis of our positions and reduced our directional risk. It is time to rebalance and assess our risks.
A table of the current portfolio in SPY (S&P 500 ETF), IWM (Russell 2000 ETF) , TLT (Bond ETF) and TBT (Inverse Bond ETF) was displayed. The table included the positions, initial liq as of January 20th, current net liq as of February 9th and the change in liq in each position. The Top Dogs portfolio is down ▼$173 or -0.3% on a $50,000 IRA portfolio while during the same time period the S&P 500 is down 1.3% (or ▼$650). Our portfolio is beta-weighted to the S&P 500 ETF (SPY).
A table showed how we reduced the beta-weighted delta of the current portfolio by selling -5 QQQ (Nasdaq 100 ETF) March call spreads at a $2.05 credit. This adjustment reduced the SPY beta weighted deltas by 63 to a beta-weighted delta of 70.
Watch this fourth segment of “Top Dogs For Smaller Accounts” with Tom Sosnoff and Tony Battista for the takeaways and more information about rebalancing and stress testing in a volatile market.