Katafin Week 14 — Fairly Valued?. It’s kind of hard to understand the…
By: John Andrews
Tags: Options Trading, Personal Finance, Retirement

Are those storm clouds or is the sky clearing? Depends on who you ask. It’s kind of hard to understand the value of some companies at the moment. I use Zoom and its fine but is there any possible way that it is worth $116 billion? No, absolutely not. Our company uses Uberconference for our daily conference calls which is infinitely cheaper and much easier to use. I feel like I’m watching Billy Beane in Moneyball as he realizes what he inherently understood as a player, markets have a herd mentality based on esoteric factors vs. a complete understanding of how it actually works.

Zoom is a videoconferencing platform at the moment, nothing more, nothing less. Videoconferencing is a feature of a larger communications and workflow management but increasingly part of many platforms ranging from Google and Facebook to Microsoft and Slack, its not hard to find a videoconference service. This reminds me of the froth of the Dotcom era with the valuation excuse being ‘work has changed’. That may be true but Slack’s acquisition by Salesforce (for a measly $28 billion) points to an integrated future for business service platforms. IMHO, Slack is infinitely more useful. I believe the hunt is on for additional add-ons for large players for companies like Asana and Atlassian, both of which we use at Photofy.

This all goes back to of of my model fundamentals, buy things you use, like and understand (pure Buffet). The real difference here is that I’m not really buying anything to hold, that’s what our managed account is for. I’m buying and selling premium and seeking to maximize the velocity of those trades. Even a wildly overvalued stock like Zoom, can provide returns but I could also get caught owning something I don’t believe in selling a Put on a options wheel at a price where I might not be able to sell any Calls afterward. I’ve avoided this to date but as the inevitable pullback comes, I want to be vigilant about what I’m committed to. Straddling rising or falling positions can work if I stay flexible.

Net Invested Capital — $110,062

Assigned: WORK-100 shares at $31-(-$18). F-300 Shares-$2549.90 ($299.90 profit). JETS 200 Shares-$3899.89 ($299.89 profit). XPEV-bought 100 at $50.

NRZ Premium-$10 12/18 Call-$37 (closed early for $17) $20.

GE Premium-(2) $10.50 12/11 Put-$40 (closed early for $8) $32. $10 12/4 Put-$20 (expired) $20. $10.50 12/4 Put-$49 (expired) $49

GOLD-$22.5 12/4 Put-$37 (closed early for $6) $31.

MUR Dividend- $37.21

TOL Premium-$46.5 12/4 Put-$35 (expired) $35. $48.5 12/4 Put-$65 (expired) $65.

INTC Premium-$47 12/4 Put-$41 (closed early for $20) $21. $48 12/11 Put-$81 (closed early for $37) $44. Dividend — $66.21.

PTON Premium-(2) $124 12/4 Calls-$100 (closed early for $70) $30. $122 12/4 Call-$98 (closed early for $43) $55. (2) $129 12/4 Calls-$218 (closed early for $124) $94.

F Premium-(5) $9 12/11 Puts-$125 (closed early for $47) $78. (3) $8.5 12/4 Calls-$60 (assigned for $2549.90-$299.90 profit) $60.

WORK Premium-$39 12/4 Put-$101 (closed early for $55) $46. $31 12/4 Put (assigned for $3,099.92, $17.79 loss)

JETS-(2) $19.5 12/4 Call-$50 (assigned for $3899.89–$299.89 profit) $50.

UDOW-$85 12/18 Put-$225 (closed early for $100) $125.

APHA Premium-(2) $8 12/4 Put-$74 (expired) $74.

AAPL Premium-$117 12/4 Put-$90 (sold early for $20) $70. $121 12/4 Put-$48 (sold early for $6) $42.

SNAP Premium-$44 12/4 Call-$53 (closed early for $15) $38. $43 12/4 Call-$41 (closed early for $10) $31.

SBUX Premium-$96.5 12/4 Call-$52 (closed early for $20) $32.

WMT Premium-$149 12/4 Put-$ (closed early for $10) $48.

PLTR Premium-(2) $20 12/4 Puts-$80 (closed early for $20) $50. $20 12/4 Put-$35 (closed early for $4) $31. $20 12/4 Put-$45 (closed early for $7) $38.

TWTR Premium-$44 12/4 Put-$35 (closed early for $15) $20.

DKNG Premium-$48 12/4 Put-$60 (expired) $60.

NET Premium-$70 12/4 Put-$51 (expired) $51.

QS Premium-$25 12/18 Put-$240 (closed early for $150) $90.

BB Premium-$7.5 12/11 Put-$43 (closed early for $30) $13.

XPEV Premium-$50 12/4 Put-$77 (assigned) $77.

Total Return: $2,333.42, 2.12%

Whether or not many stocks are overvalued remains to be seen. Regardless, volatile premiums in predictable channels remain a core part of the strategy. The CAPE index just reached an alarmingly high ratio but then again, with the strong possibility of more money to be pumped into economies around the globe, I believe true measurements are difficult. An extra trillion or two still go a long way to distorting what might actually be happening. Apologies to our kids for the debt.

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.