Exits, 8/9/2024
How we did on the trades we exited this week.
Dids/Pexels
A Market Meltdown PSA
If you’re concerned about downside risk for positions you already own, consider hedging. As a reminder, you can download our iPhone hedging app here, or by aiming your iPhone camera at the QR code below.
This Week’s Trade Exits
As soon as I exit a trade, I note that in the comments of the post where I first mentioned the trade; at the end of the week, I try to track them all in one post. Starting in July, 2024, I have also been tracking them in this spreadsheet. These are the trades I exited this week.
Stocks or Exchange Traded Products
Robinhood Markets (HOOD 0.00%↑). Bought at $18.05 on 8/1/2024; stopped out at $14.57 on 8/5/2024. Loss: 19.3%.
Options trades
Call spread on Super Micro Computer (SMCI -1.47%↓). Entered at a net debit of $1.60 on 7/31/2024; expired worthless on 8/9/2024. Loss: 100%.
Call spread on Super Micro Computer (SMCI -1.47%↓). Entered at a net debit of $1.60 on 8/2/2024; expired worthless on 8/9/2024. Loss: 100%.
Call spread on Super Micro Computer (SMCI -1.47%↓). Entered at a net debit of $1.65 on 8/5/2024; expired worthless on 8/9/2024. Loss: 100%.
Call spread on Robinhood Markets (HOOD -0.28%↓). Entered at a net debit of $0.33 on 8/2/2024; expired worthless on 8/9/2024. Loss: 100%.
Call spread on Robinhood Markets (HOOD -0.28%↓). Entered at a net debit of $0.33 on 8/5/2024; exited at $0.89 on 8/9/2024. Profit: 170%.
Calls on PetIQ (PETQ 0.00%↑). Bought at $2.50 on 7/31/2024; sold at $8.40 on 8/8/2024. Profit: 236%.
Comments
Stocks or Exchange Traded Products
Our core strategy is to buy equal dollar amounts of Portfolio Armor’s Top Ten Names, put trailing stops of 10% to 20% on them, and then replace the stocks with current top names when we get stopped out. The recent market environment has made that challenging, as this HOOD exit illustrates. I bought the stock as a top name last Friday, with a 20% trailing stop, and got stopped out of it on Monday after Japan crashed.
This Friday, I tried a different approach, selling puts on a top name, so I can get paid to buy it at a lower price if we have another day like this past Monday.
The performance of our top names remains strong. So far, we have 6-month returns for 59 weekly top names cohorts since we started this Substack at the end of December, 2022, and as you can see here, our top names have averaged returns of 22.08% over the next six months, versus SPY’s average of 12.92%.
By exiting our losers early and letting our winners run, our core strategy can generate even better performance than that.
Options
I wrote an explanation of my 3rd bullish trade on Super Micro Computer on ZeroHedge earlier this week, but that doesn’t explain my previous two bullish trades on it.
And I actually have a fourth bullish trade on it set to expire next week. I think part of my problem here was I made so much money on the stock after buying as a top name last year, that that colored my view of it. In truth, it hasn’t been a Portfolio Armor top name for months, and judging from its recent margin compression, it doesn’t seem to have the same moat that other AI-related stocks like Nvidia (NVDA 0.00%↑) do. I shouldn’t have quadrupled down on it like this.