31.97% Return for September
All positions have been closed for September. There were 5 positions, average holding period of 3 days, and only 1 position with a loss. The total return for September was 32%, resulting in $940 realized profit off an initial investment of $2,940. The following summarizes the trades for September.
IWM: This is the Russell 2000 Index ETF. Puts were bought and sold in a single day turnover for a profit. This strategy was used twice to make 45% and 30% returns. The timing was crucial and profits were taken quickly. In the current calamity facing the financial markets, shorting indicies is a simple profitable strategy.
IRF and VSH: Interlink (IRF) and Vishay (VSH) were traded in a MnA arbritrage strategy. As discussed in the previous post, VSH had initiated a hostile bid direct to shareholders for IRF at a significant premium. The strategy was to go long IRF (buying calls) and short VSH (buying puts). Unfortuneatly IRF urged shareholders not to accept the deal and the bid is still on the table. Thus IRF declined and the calls lost a significant amount of value. On the flip side, VSH lost a significant amount since the puts were purchased on 9/11. They stock price slid about 18% from 9/11 to 9/19 and resulted in a 200% return on the puts.
WFMI: Due to declining discretionary consumer funds and other technical indicators WFMI was trending down. Puts were bought on 9/12 very close to the money. Within a day the puts were ITM (In The Money). This position was up 20% but it wasn’t closed. On 9/15, WFMI started trending up after a high volume gap up in early trading. The puts were immediately sold and the position closed for a 15% gain.
Ares Trading is satisfied with September’s performance. The target ROI was 30% and the goal was attained. In addition, positions which were losing value fast were stopped adequately. For the coming month of October the target ROI is going to remain 30%. Ares Trading will focus largely on index ETFs (DIA, SPY, IWM, QQQQ, XLF, XLE, DBC) and also try to exploit the credit crisis which is sinking the financial sector.
