Thursday, March 19, 2009

DIA -- Catchup -- Position Closed

This is a catchup post, since I haven't been diligently posting transactions.

I closed the DIA position because I had been reading a lot about how the Dow Jones Industrial Average is a "sick" index. And my experience with it had not been good either. My overall history:

PriceDateDescriptionTotalaXIRRaROI
$89.912009-01-06Buy 1000 DIA @ $89.91-$89,905.60----
$89.912009-01-06Sell 10 DIA Jan 2009 $90 @ $1.96$1,940.05121.7%78.8%
$86.742009-01-08Buyback 10 DIA Jan 2009 $90 @ $0.69-$709.95-40.1%-49.8%
$86.742009-01-08Sell 10 DIA Jan 2009 $86 @ $2.41$2,390.05-11.4%-11.6%
$85.142009-01-12Buyback 10 DIA Jan 2009 $86 @ $1.14-$1,159.95-38.5%-46.5%
$85.142009-01-12Sell 10 DIA Feb 2009 $85 @ $4.05$4,030.0516.4%14.3%
$80.402009-01-20Buyback 10 DIA Feb 2009 $85 @ $1.84-$1,859.95-25.7%-27.2%
$80.402009-01-20Sell 10 DIA Feb 2009 $80 @ $4.10$4,080.05-11.2%-10.8%
$78.002009-02-12Buyback 10 DIA Feb 2009 $80 @ $1.01-$1,029.95-34.7%-38.1%
$78.002009-02-12Sell 10 DIA Feb 2009 $77 @ $2.52$2,500.05-15.8%-15.6%
$75.762009-02-18Buyback 10 DIA Feb 2009 $77 @ $0.40-$419.95-35.9%-39.6%
$71.822009-02-24Sell 10 DIA Mar 2009 $72 @ $2.95$2,930.05-29.4%-30.0%
$66.852009-03-05Buyback 10 DIA Mar 2009 $72 @ $0.50-$519.95-51.7%-60.5%
$66.502009-03-05Sell at end of period$66,500.00-60.9%-78.6%
 
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2 comments:

  1. UnknownApril 19, 2009 at 10:33 AM

    If you are long on the Dow or believe there will be a recovery, why did you sell out at the end of the period on 2009-03-05?

    Why not keep your position there and continue to write calls? It seems you were making a great income just from writing calls and buying them back. The sale at below purchase price killed the gains you made on options and more.

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  2. RandyApril 19, 2009 at 11:27 AM

    Because I don't have faith in the DJIA index right now. It's a cap-weighted index -- the top 5 stocks of the 30 represent almost 40% of the total market cap of the index and the top 10 are 63% of the total.

    Although the index has moved up 24% since I sold it (still less than the original purchase price!), the top 5 market cap stocks have only moved up 13%. While the average component has moved up 46%. So Market Cap weighting worked against the index.

    If anything, I should have moved to selected components of the index. But the two biggest movers were C and BAC -- and I had already exited WFC because I didn't want the volatility and uncertainty of the financial industry. Or the auto industry.

    What can I say? Uncertainty abounds. :)

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