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Realistic Strategies, Realistic Returns

COI Fundamentals Issue: April 17, 2023

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Current Positions

Click here to access the “Portfolios” section to view each portfolio’s respective positions.

Portfolio Discussion

All-Weather Portfolio

After the recent pullback, the All-Weather portfolio is now up 9.88%, with the Vanguard Total Stock Market ETF (VTI) doing the heavy lifting, up 25.36% since it was introduced to the portfolio back on 6/15/22.

I will be rolling all of our LEAPS positions to the 2025 expiration cycle this week. So, be prepared to make a few trades this week as we increase the duration of our LEAPS while simultaneously continuing to sell more call premium.

Yale Endowment Portfolio

Our Yale Endowment portfolio is up 7.34% after being down over 4% at the end of March expiration.

Like our All-Weather Portfolio, I will be rolling all of our LEAPS positions to the 2025 expiration cycle this week. So, be prepared to make a few trades this week as we increase the duration of our LEAPS while simultaneously continuing to sell more call premium.

Dogs (and Small Dogs) of the Dow

It’s the tale of two portfolios. Our Small Dogs portfolio is up a healthy 19.10%, while our Dogs of the Dow portfolio is down 7.58% since the onset of 2023. CVX, AMGN, IBM and MMM have all had dismal starts to 2023 which is bringing the larger Dogs of the Dow portfolio to its lows of the year, although they are staging a nice comeback. Remember, just last expiration cycle, the Dogs were down close to 19%.

However, the Small Dogs have experienced the polar opposite, hitting close to an 18% gain before pulling back due to the SVB scare that has rattled the market. Still, the Small Dogs have managed a staggering 19.10% in just the past 4 months.

We have rolled most of our positions out to May with IBM being the only exception. I will roll IBM early this week and look to roll other Dog positions where the call premium is little to nothing.

Warren Buffett’s Patient Investor Portfolio

Nothing has changed here. I’ve decided to keep our positions to a minimum due to the ongoing volatility in the market, but hopefully, that could be changing soon. At the moment, we only have one position (AAPL) but intend to add several more in the coming weeks. Our AAPL position is now up close to 20% after being down close to 25% just a few months ago.

As I have stated in our last few issues, I will be building out the portfolio to a minimum of five positions over the coming two expiration cycles, and remember, because this is an active portfolio, we will be rebalancing every month around expiration.

James O’Shaughnessy’s Growth/Value Portfolio

Like the Patient Investor portfolio, my Sentiment portfolio continues to be cautious. We locked in gains in CVX several weeks ago and now my hope is to add at least two to three positions over the next expiration cycle.

And like our Patient Investor portfolio, I will be rebalancing every month around expiration. This simply means that we could have a position for just one expiration or, at least in theory, in perpetuity.

Next Live Analyst Briefing with Q&A

Our next Live Analyst Briefing with Q&A is scheduled for tomorrow, April 18, 2023, at 12 p.m. ET, where we will be discussing the options market, giving a detailed look at open positions, strategies used, and will have a follow-up with live questions and answers. Register here.

The next Cabot Options Institute – Fundamentals issue will be published on May 15, 2023.

Andy Crowder is a professional options trader, researcher and Senior Analyst at Cabot. Formerly with Oppenheimer & Co. in New York, Andy has leveraged his investment experience to develop his statistically based options trading strategy which applies probability theory to option valuations in order to execute risk-controlled trades. This proprietary strategy has been refined through two decades of research and real-world experience and has been featured in the Wall Street Journal, Seeking Alpha, and numerous other financial publications. Andy has helped thousands of option traders learn and implement his meticulous rules-driven options trading strategies through highly attended conferences, one-on-one coaching, webinars, and his work as a financial columnist. He currently resides in Bolton Valley, Vermont and when he’s not trading, teaching and writing about options, he enjoys spending time with his wife and two daughters, backcountry skiing, biking, running and enjoying all things outdoors.