Risk Disclaimer

The positions in this portfolio are incredibly risky and extremely volatile.

No one at Get Irked is a professional financial adviser (or a doctor), so consult with your own financial adviser to see if any of these positions fit your risk profile (and stomach).

Virgin Galactic (SPCE)

Virgin Galactic (SPCE) continues to be unable to achieve liftoff, locking in a weekly loss of -7.91% and earning itself the spot of the Week’s Biggest Winner. Although SPCE wasn’t stinky enough to land on the Top 5 Biggest Losers for the year, it got as close as you can get, coming in as the #6 Biggest Loser in 2021. Here’s hoping SPCE can get off the ground in 2022…

Looking Back at 2021…

The market had an about-face turn on speculative plays toward the end of 2021, positively destroying nearly the entire Speculation in Play portfolio. Of course, my abysmal attempts at options plays this year definitely didn’t help matters any, knocking the portfolio down nearly -8% with my losing trades alone.

Speculation in Play got walloped with a loss of -11.79% for the year, a situation only exacerbated further by the the S&P 500’s +26.89% win. This kind of misfire makes the end of 2021 a merciful reprieve to what’s been terrible performance for this portfolio.

2021’s 5 Biggest Winners

1. Tradeweb Markets [TW]: +60.35%
2. Advanced Micro Devices [AMD]: +56.91%
3. Uranium ETF [URA]: +48.86%
4. Yeti [YETI]: +20.97%
5. Wendy’s [WEN]: +8.80%

2021’s 5 Biggest Losers

1. GrowGeneration [GRWG]: -67.55%
2. Danimer Scientific [DNMR]: -63.76%
3. Golden Minerals [AUMN]: -54.04%
4. Zillow [Z]: -50.81%
5. Pinterest [PINS]: -44.84%

SPY 2/18 477-474 Put Spreads: *New Position*

While it may seem counter-intuitive for me to just speak of how options trading was responsible for a big chunk of the portfolio’s losses in 2021 and then jump back in with another options trade at year-end, I feel it’s important for me to keep beating my head against this wall in the interest of learning (and demonstrating what not to do to you, my loyal readers).

On Wednesday, December 29, I bought put spreads on the S&P 500 using the SPY, the ETF that tracks the S&P 500, and targeted the 477-474 put spreads expiring on February 18, 2022 for $0.993 per contract after fees (put options are sold in 100-contract lots meaning each put spread cost $99.30). As a reminder, for the spreads to be profitable, the SPY must drop below $477 by expiration of February 18, 2022 by more than the cost of the spreads ($0.993). In other words, if the SPY closes below $476 on February 18, I stand to capture profit all the way down to $474 (a total potential gain of slightly more than 300% of the initial investment: $477-474 = $3.00 / $0.993 = 3.02114 = 302.114%).

My thesis is that with the S&P 500 seeing a gain of more than 25% in 2021 combined with concerns of the Fed, inflation, and geopolitical struggles in 2022, that many investors will lock in the gains from 2021 early in 2022 (to avoid paying capital gains taxes on said gains by skipping year-end). 

The combination of profit-taking and economic concerns will likely result in a selloff in the markets early in the new year, an event that is historically typical based on prior situations when the prior year saw such significant gains.

Additionally, because volatility has flowed out of the markets, the premium cost of options has dropped, meaning I was able to risk 2.62% of the portfolio for a potential gain of 7.92%.

Trade Status of this Update
Current Value: $1.075
Profit/Loss %: +8.26%