As it is the first of my first active month, and I just exited (most of) my NKLA puts, I figured I share a quick update.
Last Friday (Nov 27th) I allocated ~5% of my portfolio into (a) 12/11 NKLA $23.5 Puts for $1.6 each, and (b) 12/18 NKLA $27 puts for $3.2 each, with ~80% allocated to the latter. After two trading days of sharp Nikola sell off, I sold these puts at a 6.7 and 10.3 each, for a 320% and 220% profit respectively.
Monday’s sell of was driven by GM backing out of the supply deal. While this was early news, it wasn’t totally unexpected. However, I admittedly was the beneficiary of a fair bit of luck that the sell of was as dramatic as it was.
Today’s sell off I expected more from. Despite the 166M shares coming to market and (likely) eager to sell, today’s volume was only ~40M above average (which likely includes a fair number of option sellers delta hedging). This indicates to me that there may be some more downward pressure on the stock in the coming days. Because of that, I have left open a very very small position (<.5%) in $10 NKLA puts, incase there is some residual downward pressure in the coming days.
Nov 30th, I also updated my portfolio. I realized that the HHC upside had diminished as the stock had rallied a bit, and so opened up a number of other smaller positions to diversify away. As of yesterday, my approximate allocation (less NKLA puts) was as follows:
My thoughts on HHC can be found here, while my thoughts on LBTYK can be found here. I have thoughts on AMBAC and MSGS that make me comfortable with the stock, but are not yet ready to be published to this site. VIAC, NYT, IAC, and TWTR are smaller allocations that come from other readings I have done. The asymmetrical upside on some of these seems very high, but I because I haven’t had the resources to independently research these stocks I am not as confident in them, and am using them mostly as a way to diversify my portfolio while keeping true to my core investment philosophies.
Portfolio analysis
I also ran my November daily returns through a quick analysis vs. the SP500 (this is definitely the wrong benchmark, but it’ll do for now). What I found was that the Long-Vol-Special-Sits (LVSS) portfolio returned 31.7% for the month of Nov, compared to the SP500’s 10.8%. Furthermore, a quick regression shows that the LVSS portfolio did this with only a 12% correlation, and 1.4% R-squared to the market.
