Exits, 9/20/2024
How we did on the trades we exited this week.
Dids/Pexels
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 this spreadsheet. These are the trades I exited this week.
Stocks or Exchange Traded Products
None
Options
Call spread on Coinbase (COIN 0.00%↑). Entered at a net debit of $2.50 on 6/21/2024; expired worthless on 9/20/2024. Loss: 100%.
Call spread on Iris Energy (IREN 0.00%↑). Entered at a net debit of $0.50 on 7/15/2024; expired worthless on 9/20/2024. Loss: 100%.
Call spread on Dell Technologies (DELL 0.00%↑). Entered at a net debit of $1.30 on 6/28/2024; expired worthless on 9/20/2024. Loss: 100%.
Call spread on TransMedix (TMDX 0.00%↑). Entered at a net debit of $1.65 on 8/20/2024; expired worthless on 9/20/2024. Loss: 100%.
Cash secured puts on Innodata (INOD 0.00%↑). Sold for $1.40 on 8/9/2024; assigned on 9/20/2024, at a price 10.1% below our break-even. Loss: 10.1%.
Comments
Stocks or Exchange Traded Products
No exits this week. So far, we have 6-month returns for 64 weekly top names cohorts since we started this Substack at the end of December, 2022. Since then, our top names have averaged returns of 19.49% over the next six months, versus SPY’s average of 12.57%, as you can see here.
Options
It’s no fun writing these Exits posts when I have a bunch of losing trades, but it’s important to do so to be transparent, and to see what insights, if any, we can take away from them.
Coinbase and Iris Energy are both linked to Bitcoin, so those trades became doomed when Bitcoin started to slide over the summer.
Dell Technologies (and Coinbase, for that matter) were both post-earnings trades, where we place a bullish trade on a stock that has dropped about 20% or so after earnings. One thing I didn’t do with these two stocks that I did with our successful trade on SalesForce (CRM 0.00%↑) is pay attention to valuation. The reason I didn’t is because DELL was a Portfolio Armor top name at the time, and COIN was essentially a bet on Bitcoin. Not that fundamentally cheap stocks can’t get cheaper, but all else equal, I think it’s another tailwind for us, which is why we placed a few bullish bets recently on PA top names that were also cheap on a valuation basis.
TransMedix was another Portfolio Armor top name (it has been more recently as well). It was also an expensive stock, with excellent technicals, and we did something a bit different with this trade, as I wrote at the time:
With this one, I’m going to do something a little different and just bet on it trading higher a month from now, rather than holding it through its next earnings release. Given its valuation, I feel more comfortable placing a shorter-term trade here.
In hindsight, if I was concerned about valuation, I probably should have just waited.
Innodata was another Portfolio Armor top name, one I didn’t want to buy at its then-current price, so I sold cash secured puts on it. As it happened, the stock dropped a bit lower than I thought it would.
On The Bright Side
Some of our more recent trades have been performing well. For example, this one on Powell Industries (POWL 0.00%↑) is currently on track for a >200% gain.
If You Are Concerned About Downside Risk
As a reminder, you can download our iPhone hedging app by clicking on the image below.
