I am traveling and while I am away, I am not oblivious to what’s been happening with the stock market. I checked in this morning to see the status of my IWM collar. In case you missed it, here is a post from March 11 about how I planned on protecting my portfolio with an options collar strategy.
As of this morning, before market open, I captured a screen shot of my position.
I originally sold IWM 230 calls for December 19 expiry for $12.91 ($3,874) and those contracts are now worth $0.78 ($951). I am strongly tempted to buy them back and may do so sometime today to bank the 75% return largely because I don’t think IWM will stay low and I can re-sell calls again as it rises but I could be wrong.
The PUTS I bought with the call premium for $12.62 are now worth $34.88 but I won’t be selling these because these are my insurance policies against losses. If IWM remains below $214 in December 19, my “losses” will be limited by my put option right to sell it at $214 even though it’s trading at $181 as of today.
This is just one slice of one trade on a large diversified portfolio so let me tell you about one more.
Back in November 2024, I also bought Swiss currency as a hedge against losses on the USD. That trade is up 4.6% while the stock market losses continue to mount. It’s not a fabulous return and that was not the purpose, the purpose was to limit losses and I have none with this investment.
During that same time frame I purchased EURO currency and that trade is up 4.3% so far. This was another hedge diversified from the Swiss and US Dollar to hedge. I have family that lives in Europe and have other uses of this currency but it’s all part and parcel to the overall investment portfolio strategy.
UPDATE: I did end up closing the call position around $2.35 and banked over 80% profit. If IWM rallies in the near future, I will sell more calls, if not I will just keep my protective puts.
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Are you panicking or did you have hedges in place to keep your cool in this volatile market? Let me know in the comments below.