Our year-to-date trade performance through October 16th appears below.
This Week’s Trade Exits
As soon as I exit a trade, I note that in the comments of the post where I first mentioned the trade; at the end of the week, I try to track them all in one post. Starting in July, 2024, I have also been tracking them in a spreadsheet. These are the trades I exited this week.
Clicking on one of the exit cards should take you to the original alert where we mentioned the trade; exits will be documented in the comments on the dates they occurred.
Stocks or Exchange Traded Products
None.
Options
Comments
Stocks or Exchange-Traded Products
No stock or ETF exits this week.
Our Top Names’ performance remains strong. The April 9th cohort gained an average of 38.93% over six months, versus 14.52% for SPY, as the chart below shows.
Options
This is an options-expiration week, when our losing exits tend to cluster. Our pre-set exit orders often get us out of winners earlier, while positions that never reach their targets can remain open until expiration.
Three losses exceeded 100% of the trades’ original maximum risk. We had paid to buy back the short calls, leaving the long calls uncapped. Those buybacks added to our costs. When the long calls expired worthless and the put spreads incurred full or nearly full losses, our total losses exceeded the amounts originally at risk.
Several bullish trades tied to AI infrastructure and space that we entered in May and June are now approaching their final expirations. The remaining dates span October, November and December, with some extending into 2027. We expect more losses from this older group as it rolls off. Some AI infrastructure companies still have time to recover, but that recovery has to arrive soon enough and be large enough to help the options we hold.
More speculative companies pose a particular challenge. Their valuations can depend heavily on distant growth, with little current earnings or cash flow to anchor them. When the technical trend breaks, there may be little valuation support to slow the decline.
Refining Selection And Exits
Our June 29th Fundamentals Get A Vote alert marked a step in that direction: we began recording RSI and Chartmill’s Technical, Setup and Fundamental Ratings in our trade alerts. Since then, we’ve incorporated fundamentals more holistically, weighing the business, its financial condition and its catalysts alongside the chart. The entry statistics give us a record we can compare with subsequent outcomes as we refine security selection.
Our weekly Runner Reviews reassess exit targets for uncapped options as prices, time remaining and catalysts change. The aim is to capture more of a winning trade’s gains before a reversal gives them back.
Concentration And The Risk/Return Tradeoff
As we noted last month, the broader vulnerability is concentration risk. Portfolio Armor’s Top Names, our Market Watchers, and the Multibaggers we follow often cluster around the same sectors or investment themes. We already use the Chartmill Setup Rating and our preferred RSI band to screen out overextended entries. Even with those gates, several valid signals can reverse together when leadership rotates or a previously strong theme sells off. That risk is inherent in an approach designed to concentrate capital in our strongest ideas.
Risk-averse investors can address that differently through Portfolio Armor’s hedged-portfolio method. It also concentrates on securities with the highest expected returns, but it strictly limits potential downside according to the investor’s selected threshold, as described in the post below.
The graphic below compares the historical return potential of our options trading, unhedged Top Names stocks and hedged portfolios, using simplified annualized illustrations.
Calculations and source records.
We’ve continued entering new trades when stocks passed our screens. We’ll keep comparing the newer cohorts with the earlier ones and looking for evidence-based ways to sharpen the process. For now, the clearest course is to apply our existing entry gates and weekly runner reviews consistently while continuing to refine selection and exits.