The Hemp Boca Portfolio

Related imageA new portfolio!

One of our PSW Investment Companies, Hemp Boca, has a weekly radio show that I'm often a guest on and I've been giving trade ideas to their listeners and we have now begun to track them in a new virtual portfolio that we started with $50,000 and we're playing this one small and conservative – so it is a great way for people to get started learning to manage a small options portfolio.

We initiated the portfolio on May 21st so just over a month and we're only up 1.1% so far – so these are still good for new trades and we will add to the portfolio over the course of the year with a goal of making 25-30% annual returns.  Initially, there's always a bit of a loss when you add new positions as you are penalized by the bid/ask spreads of the options since your broker always shows you the worst-case balance.

So far, we've deployed just $6,895 of our cash and about 1/3 of our ordinary margin.  As this is our first summary of the positions, I will make some comments on each one as to the logic of the position and we will use these reviews for reference (as you always should with portfolios) to remind ourselves if our premises are holding up and whether or not our investments are on track to our goals at time progresses.

For those of you unfamiliar with options – it's really not very complicated.   

  • A call is a contract you buy (or sell) that gives the the right to purchase a stock at a certain price between now and the expiration date for that contract.  In the case below, we paid $4.20 for the right to buy IMAX stock for $17 between now and Jan 17th, 2020 – the expiration day for that contract.  Our bet then, is that IMAX will be higher than $21.20 (our net cost) on that date.  HOWEVER, we mitigated that cost by selling an equal number (10) of call contracts where someone paid us $1.78 for the right to buy IMAX stock for $21 between now and Jan 17th, 2020.  That lowers our net basis on the spread to $2.42 and now we're netting


continue reading