Weekly Options Recap

Market Beating Options: Portfolio With Biggest Weekly Gains

Our options portfolio though had the biggest turnaround rising 10% just last week! As we have said before, this is our most aggressive portfolio and returns can move sharply in either direction. That said, we think we are well positioned to finish the year strong and well ahead of the market return. However, the most important success measure in the portfolio return since inception and that is well this portfolio excels. Since inception in January 2007, the return on this portfolio is 312% versus a market loss of -25% over the same time period. No question that we take more risk in this portfolio, but we consider those risks worthwhile in light of returns like those. We took three new short positions which accounted for most of the weekly gain last week. We took these positions to take advantage of what we considered were oversold conditions from the prior week. The overall market got very pessimistic the prior week as the market indices dropped significantly. With those market declines came a sharp increase in volatility which helped push up option premiums. Higher option premiums make it more worthwhile to take short positions like the ones we took last week. All three short positions expire in November and we expect each of them to expire worthless which will leave us with 100% gains. We still believe this portfolio can make a strong run prior to the end of the year. We are 70% invested and may invest in another call option or two if we find compelling opportunities. However, we remain cautious on call options at least until the market can break through the 1100 level on the S&P.

Portfolio Details Available Online At: http://www.marketbeatingstocks.com