The Fund's performance in January was down 2.46%, due to some positions heading into negative territory.
- One old position was closed at a profit.
- Six new positions were opened, of which one was closed for a profit, and the remainder five heading into February and March expiry dates.
Two of the new positions opened this month are merely for a hedge to balance our overall portfolio and reduce risk due to how violently the market can move thanks to our buddies at the Fed.
The New Year started with a big yarn and continued to do so with a sidewards market until January 23rd, when the bears were finally let out of the gate again.
The writing was definitely on the wall that a corrective phase was about to commence, and we are witnessing this right now. Our internals show that we are entering a bear market for 2014, and so will position ourselves accordingly.
The S&P 500 was down 3.56%, and January typically sets the stage for how the rest of the year will pan out.
It will be a volatile year, and this compliments our strategy nicely as we see higher IV (implied volatility), which in turn generates more premium received when writing (selling) credit spreads.
The lower IV in January meant we hovered around 50% cash this month as the risk / reward ratios were just not hitting the levels we were comfortable with.
For the buy and hold type of investors, 2013 was a simple year to profit from. 2014 will be a much tougher year to navigate, and likely will wipe out a lot of traders that aren't positioned correctly. We are being patient, and by being light on the trades this month, has been for a reason.
With the current state of the market, we hope to profit into this downturn.