Portfolio Update: March 2025

Overview:

The market was a little scary over the last month, and at one point it looked like we would have further issues with the Continuing Resolution which would lead to a government shutdown.

Luckily, Congress was able to push through a bill which will leave us funded until September, and the on-off tariff dance has at least slowed down.

These positive factors have at least temporarily ended the market route, and VIX has dropped from a high of 27 to about 20. This is still historically high, but much lower than the most volatile state earlier this month.

After withdrawing from my Merrill Edge account to fund my retirement accounts, I no longer plan to make further withdrawals and will just leave the account where it is. Future deposits will go to my Merrill business account instead, which I will show in future updates when that account is open.

Portfolio:

My core positions have not changed, and I still hold most of my portfolio in indexed ETFs and dividend ETFs.

My main trading instrument of SPY short strangles is finally close to breakeven after being well into the red during the VIX spike to 27. I had to roll down my short calls to collect more premium (more on that later).

As the market starts to maintain stable footing, VIX continues to drop and the positions continue to benefit.

Notable positions:

SPY 4/17 short strangle (purple): Like all of my short strangles, this one began as a 0.16 delta short strangle with about 60 days to expiration, opened when VIX was above 20. Under most circumstances, I don't have to manage the position at all; I just wait for VIX to decrease throughout the next few weeks, and then I close at 50%.

The short call was at $630, and the short put at $560. I collected about $750 premium, Making my breakeven about $553.

SPY dropped so much that it tapped my breakeven price at $553. I closed my $630 short call to realize my $342 gain. Traditionally, traders should roll their short call to the new 0.30 delta strike. I expected the market would bounce a little bit, and so I sold the 0.16 delta strike $600. This awarded me an additional $200 premium.

However, the market did not bounce, and so I closed the $600 short call shortly after to realize another $162 gain, and then rolled into the $575 strike.

Between the $503 realized gain plus the current $32 gain on the $575 strike, vs the short put's loss at $615, I am only down about $80 despite the nasty drop on SPY. A VIX comes off a little bit more, I expect this to swing green.

If I am wrong, and the market does continue down past $560, I still have the option to roll my $575 short call to $560 (rolling into a short straddle) to collect more premium. SPY would have to drop to about $541 for me to take a loss at this point.

SPY 4/30 short strangle (yellow): I opened this position with the same circumstances as the 4/17 strangle, except that I opened it a few weeks later. VIX had gone above 20, so I added additional contracts.

Similar to the 4/17 short strangle, I rolled down my call just as SPY was at its lowest point below $553. Traditionally, the trader should wait until his breakeven is breached, not just his strike. I rolled this short call a little preemptively, but so far it has worked out.

The 4/30 short puts are down about $1,055. Meanwhile, the realized gains on the $633 short call is $332, and the new short call at $600 is up $519. This position is still red by about $200.

However, I've got room to roll down that short call again if I need to, and I've got some breathing room before my breakeven gets tapped. Barring any significant changes to the economy or Fed policy, the worst is behind me on this position. I still intend to hold for 50% gain.

3/21 LCID $2.50 short put: I usually don't trade wheel positions anymore, but there are a few points about LCID that appeal as both a trading instrument and a company.

Although Lucid is struggling as a company, losing money left and right, even the most bearish trader would agree that Lucid technology is valuable. The company cannot make money selling cars right now, but according to Lucid itself, their battery technology is a cut above the competition.

Given that LCID is currently receiving funding from Saudi Arabia (a death knell for most companies), I don't think its a buyout candidate at present, unless Saudi Arabia agrees. However, if the company were to sell, I think a $7.5 billion market cap sounds reasonable based on previous acquisitions for technology within the automotive industry (buying 20% of a company for $1.6 billion).

Keeping in mind that I am not an EV industry expert, this position is only worth about $1,250.

VIG, SCHD, PRU, KO, ET: These are all my dividend ETFs and shares. I am not huge on dividends, but it is nice to receive some regular income, and dividend stocks tend to do better during bear markets.

I will continue to add to VIG, which has a dividend just slightly above that of the S&P, but has a slightly lower beta (volatility vs S&P). This is a slightly defensive position without sacrificing much upside.

I have trimmed a lot of dividend positions since 2022. Below is the expected payout.

Next Moves:

I don't plan on changing my short strangle positions unless SPY resumes its downward move and starts to tap my breakevens. If that happens, I will roll down the short calls into a tighter short strangle or into a short straddle and collect more premium.

If SPY really takes a dive and I wind up down 200% of the original premium collected, I will close the position for a loss. Otherwise, I will wait for 50% gain and close.

I will continue to wheel LCID between the $2 and $3 strikes. The premium will just be reinvested into VIG, which is where I expect to put most of my new deposits.

I am in the process of opening a business investing account with Merrill. When that is open, I will add deposits there and hold shares of VOO and wheel shares of GOOG. I will show this portfolio in future updates.