Katafin Week 15 — “It’s Different This Time”
By: John Andrews
Tags: Options Trading, Options Strategy, Fintech, Retirement

Image Source: Flickr, Different, There’s Always one, by Doug NC

I can calculate the motion of heavenly bodies, but not the madness of people — Isaac Newton

In 1999, I worked for PictureVision, a digital media startup that was the backend of America Online’s You’ve Got Pictures and Kodak’s PhotoNet services. It was an interesting time as this new internet thing was beginning to take off and disrupt businesses. Actually, it wasn’t disrupting businesses at that time but you could see clearly that it would one day. IPO’s were going bananas and companies with little to no revenue and lots of promise where getting stratospheric valuations not based on reality but rather the potential of future revenue. This the whole point of an IPO and it is exciting. It is also dangerous.

New companies always have a great risk/reward proposition. Even proven companies fail regularly. Roughly half of the S&P 500 falls out every decade. I can remember visiting a Porsche dealership in Tysons Corner during the ’99 froth and all of the salespeople were hovered around their computers talking about stocks, I had to ask someone to help me with a car. When the car sales folks are more interested in trading stocks than selling cars, its probably time to consider the frothiness of the market. Add to that the timeless quote, “it’s different this time,” and you have a recipe for a downturn.

I heard a couple of market analysts on CNBC this week discussing how this IPO frenzy is different than that of 1999 because prices were only 30X revenue now vs. 46X then. Whew, I feel better, nothing to worry about. I am reminded that this is why I stopped trading stocks and options and switched to options premium. At this point, I really don’t care what happens to the market in general, I just want to be well positioned to take advantage of volatility on either side. This was a big mindset change for me and one that I am still learning to maximize. I think the market is overvalued and want to be wary of getting stuck in stocks that I’ll never be able to realize and premium gain. Fortunately, I only have a few investments to watch that give me angst about a severe market reversal.

Net Invested Capital — $80,806

Assigned Short Puts: WMT-100 shares at $150-$15,000. BB-500 shares- at $8.50-$4250. F-200 shares at $9.50-$1,900. TOL-100 shares at $47-$4,700.

GE Premium-(5) $10.50 12/11 Put-$200 (closed early for $150) $50.

F Premium- $9.5 12/11 Put-$52 (assigned $1,900) $52.

GOLD-$23 12/11 Put-$27 (closed early for $9) $18. $23 12/18 Put-$77 (closed early for $24) $53.

ASAN-$25 12/18 Put-$170 (closed early for $65) $105. 2-Option Order-$230 (closed early for $173) $57.

MUR Premium-$12.50 12/18 Put-$155 (closed early for $90) $65.

RCII Premium-$36 12/18 Call-$70 (closed early for $35) $35. $35 12/18 Put-$160 (closed early for $100) $60.

TOL Premium-$47 12/11 Put-$155 (assigned-$4,700) $155.

HEES Dividend-$27.87

BB Premium-$7.50 Put 12/18-$72 (closed early for $46) $26. $8.50 12/11 Put-$130 (assigned-$4,250) $130.

XPEV Premium-$51 12/4 Put-$173 (closed early for $37) $133. $52 1/8 Put-$330 (closed early for $248) $82.

SDOW-$18 12/18 Call-$50 (closed early for $20) $30.

RIO-$72.5 12/18 Call-$135 (closed early for $75) $60.

INTC Premium-$49.5 12/18 Put-$86 (closed early for $59) $27.

WMT Premium-$150 12/11 Put-$125 (assigned-$15,000) $125.

PTON Premium-$122 12/11 Calls-$180 (closed early for $76) $104.

JETS premium-$22 12/11 Put-$45 (closed early for $5) $40

APHA Premium- $7.50 12/18 Put-$23 (closed early for $12) $11

AAPL Premium-$121 12//11 Put-$146 (sold early for $58) $88. $119 12/18 Put-$142 (sold early for $79) $63.

SNAP Premium-$48 12/11 Put-$75 (closed early for $16) $59. $48 12/18 Put-$107 (closed early for $53) $54. $50 12/31 Put-$160 (closed early for $115) $45.

PLTR Premium-$26 12/11 Put-$35 (expired) $35. (2) $25 12/18 Puts-$228 (closed early for $174) $54.

ELF Premium-$20 12/18 Put-$50 (closed early for $30) $20.

TWTR Premium-$47 12/18 Put-$107 (closed early for $75) $32.

DKNG Premium-$50 12/11 Put-$189 (expired) $189. $48 12/18 Put-$200 (closed early for $180) $20.

NET Premium-$78 12/11 Put-$45 (closed early for $20) $25.

QS Premium-$47.50 12/18 Put-$285 (closed early for $35) $250.

OLLI Premium-$7.5 12/11 Put-$115 (closed early for $85) $30.

Total Return: $2,409.87, 2.98%

As investors rotated into and out of new IPOs this week, changing their investments like their socks, some of the hot tech stocks rose and fall as capital changed hands. I bailed too early on NET and XPEV as they seemed like they could tank at any minute but as Doordash and AirBnb exploded and then drooped slightly, money rotated back. Timing the market is hard and a bad idea. Timing the emotions, maybe harder but somewhat more predictable.

Note: This is not financial advice, and I am not a financial professional. This article is an account of my personal experience. This information is for entertainment purposes only.