Election day analysis

Below is how the S&P500 reacts to the elction day over the last three elections. The 2 day before election day is at "1" and then the movement is indexed to it. e.g. if election is on 11/7/2000, then day one is the closing price of 11/6/2000.

The day before election is always a very quite one - need to remember - i.e. from 11/2/2012 to 11/5/2012 the market change is small - ths has been true for the past three ones

The day of the election (before the election) i.e. 11/5/2012 to 11/6/2012, there is some change  -2% in 2000, 1% in 2004 and -4% in 2008, looks like 1.5% in 2012 (day not closed yet)

Post election, there is more movement, i.e. movement from 11/6/2012 to 11/7/2012. -2% in 2000, 1.5% in 2004, -5% in 2008 and we dont know yet for 2012

Thus, I will close my position today as there may be a major movement tomorrow.

Have to start earlier Friday

Sustained big losses today - $1200. Should have only lost $400-500 but made a few mistakes...

Mistake 1: I waited till the later part of the day to close out my old positions and open new ones. Have to start early when there is more chances to fill out on orders

Mistake 2: Opened orders on new positions before closing old ones. The market moved in the wrong direction in between and exacerbated the losses. Need to close all old positions before opening new ones

Recommendations and Performance

On a great suggestion from a friend, I will be aggregating all my recommendations and their performance till now. Below excel shows that:

Long NOK

I am long NOK today. I think the stock is oversold and will bounce back in the next few days. It also took additional beating due to the market being down today.

I havent engaged in my strategy this week and stayin in all cash on that front. GDP data and consumer confidence data will be released. Such major events could cause big movements, especially on the positive side, which is the worst outcome for my strategy. So no updates on that. Sitting at around $4k gains or 30%.

Week 10

Stock assessment:

Market is down 1.5% as of mid-day due to weak factory data. Tech stocks however, are mixed. FB has found a solid bottom, while AAPL remains resilient. This is a good time for a short term AAPL strategy, as it will rebound on any good news.

However, I would stay away from the market next week as GDP and Consumer confidence data gets released. Market may move direction-ally and I wouldnt want to be on the wrong side of it. However, AAPL in these situations is great as it is usually thought to be delinked with the US economy and behaves independently of it.

Spread strategy:

I closed out my positions today. There was a major upswing due to high vol and didnt make sense going into Friday to see full gains. I have made 20% gains this week on the money in market and about 10% on the total portfolio (I kept half portfolio in cash). Here are the charts:

End of Week 9

Spread Strategy:

I am at $3,000 on a $12,500 base. Since I added money to the account going from $5,000 to $12,500, I need a different measure of performance. I have taken IRR as that is the industry standard when new money gets added, and also gets done in my venture capital industry. The IRR I will calculate is on a daily basis and my target is to get to 0.7% as my strategy clocks out on that long term (after transaction costs and bid-ask slippages). I am at 0.58% today. Below graph is just the portfolio value versus the input money. Next one is the evolution of the daily IRR:

Ex-dividend date

So on my vacations in Detroit, I got this serious sounding VM from Optionshouse. SPY was going ex-dividend the next day and my option positions were in trouble. I had 90 minutes before market close and I was on a cruise ship away from the shore with intermittent cell connection.

What happens on an ex-dividend date: Stock falls by the amount of the dividend, calls on the stock fall by the same amount, puts rise. However, if you own the stock, you get the dividend and stock falls by the dividend amount - so net nothing happens to you. If you own the call option, it falls by an amount while you do not get any dividend. The call option is an option to acquire the stock (and not any dividends). Thus, being long on calls means you loose major value on the ex-dividend date.

Thus, I had to get to the shore and call my broker. I did so around 30 minutes before market close on Thursday. Closed all my positions at market price (which means I lost major money there) and came out in cash overall.

This week has been great for me, apart from some value lost in the close. I am up around $2,900 - will put up the graphs tomorrow, when I start a new spread.

Market assessment:

FB, ZNGA are both up. My bottom call was right and I will close out tomorrow when the Greece new further lifts these stocks. AAPL options are also dark green by now. Maybe time to sell, but not sure now.