I’m realizing today that I haven’t laid out much of my portfolio allocation yet. But wanted to write a quick post updating y’all with a quick position change, as well as a longer update on portfolio allocation.
FSR options (Nov 20th Call, @$15)
To recap– when looking through monthly losses, I thought the upside of some EV “mania” we could see in FSR stock before the SPAC conversion was interesting, and could take a position with some really cheap vol. I entered into these contracts at $0.25 each on October 30th, allocating just over 5.2% of my portfolio to it.
Today, the stock hit the $15 mark, and the implied vol on the options was >100%. I considered waiting to see if I could milk a little bit more of the convexity as the stock, but quickly decided that (i) I didn’t want to be taking an outright view on a “mania” stock, and (ii) with expiration in just 8 days, the theta (time risk) was very high. So, at the inflated vol, I sold the options at $1.15 per contract, for a total return of 4.6x, and a portfolio impact of +18.7%.
In hindsight, this allocation was aggressive. I figured I have a higher risk tolerance in my own account, but forgot how much exposure long vol positions can give your portfolio as they begin to play out. Despite the positive outcome, I should have been less exposed than I was. Good learning lesson for future situations to stay more disciplined and stick closer (and under) Kelly’s.
HHC stock
I’ve been slowly building this position over the past couple months, and currently my average entry price is $62.15. Last week, the stock hit $70 for the first time in months, but has since retreated, and right now sits at $68.30. I still believe this stock has a fair market value of ~$85 – $90 per share, with the ability to produce long term returns as it capitalizes on it’s assets.
Given it’s shallow downside (and given my full time 100hr per week job doesn’t allow me time to dig into a ton of ideas), this stock makes up an very large proportion of my portfolio– currently ~70%, with the rest mostly in cash.
So YTD, returns for this stock has been 9.7%, with a portfolio impact of 6.8%.
Portfolio
After selling the options, my portfolio returns (YTD) is 25.5%, and my current portfolio allocation is:
HHC: 70%
Cash: 30%
I’ll try to keep the blog updated as I find somewhere else to allocate my idle cash!
