Here are the changes I have made to my own Market FIRE-optimized stock and options portfolio for early 2023 through mid-April, compared to my last portfolio disclosure from the end of February.
With the sector rotation out of some of the energy and industrial names that flourished in 2022 and early 2023 and into larger cap technology companies, I have made several changes in the nature of sector reallocation, as further elaborated below. During this this period I liquidated my previously single largest long stock position (Arch Resources, a coal production company in the energy sector) that had experienced an outsized run up in its market price during the prior year-plus period that I believed was not sustainable going forward and would otherwise be subject to reversal, after having closed any outstanding covered call options against that stock position.
With the proceeds from having liquidated the afore mentioned former long stock holding, I have also expanded my long stock positions in two pre-existing holdings (Wells Fargo, in the financial sector, and Uber Technologies, in the technology and transportation sectors) at attractive near-term valuations, while also selling short cash-secured puts in exchange for elevated premium in other companies in which I either already held stock (Paypal, Shift4 Payments, and Piedmont Lithium) or previously held stock (Planet Fitness and Tesla). I currently intend to eventually allow for these short put options to be assigned if they do not decline in value to the extent that would justify closing them at a profit.
Here is the current table for my long stock holdings, which uses my prior 2023 stock disclosure from February, with positions that have been liquidated indicated by strikethrough font and with positions added to indicated in boldface:
| Company | Ticker Symbol | General Description |
| Advanced Micro Devices Inc. | AMD | Technology (Semi-conductors) |
| AirBNB Inc. Class A | ABNB | Technology/Consumer Discretionary (Travel) |
| Amazon.com Inc. | AMZN | Technology/Consumer Discretionary (Ecommerce) and Enterprise Cloud |
| Berkshire Hathway Inc. Class B | BRKB | Financial Conglomerate |
| Citigroup Inc. | C | Financial (large bank) |
| Cleveland-Cliffs Inc. | CLF | Materials (Iron Ore Exploration and Steel Production) |
| Devon Energy Corp | DVN | Energy Exploration (Crude Oil and Natural Gas) |
| Freeport-McMoran Inc. | FCX | Materials (Copper and Gold) |
| General Motors Co | GM | Industrial/Consumer Discretionary (Automobile production) |
| Global Foundries Inc. | GFS | Technology/Industrial (semiconductors) |
| GXO Logistics Inc. | GXO | Industrial/Technology (Logistics and ecommerce) |
| Ollies Bargain Outlet | OLLI | Discount Retail |
| Paypal Holdings Inc. | PYPL | Technology/Financial (Fintech)/Consumer Discretionary (Ecommerce) |
| Piedmont Lithium Inc. | PLL | Commodities (Lithium) |
| Range Resources Corp. | RRC | Energy Exploration (Natural Gas) |
| Roblox Corp. Class A | RBLX | Technology (Gaming) |
| Shift4 Payments Inc. Class A | FOUR | Technology/Financial (Fintech)/Consumer Discretionary (Travel and Restaurants) |
| Uber Technologies Inc. (added to) | UBER | Transportation/Technology/Consumer Discretionary (Travel) |
| Walmart Inc. | WMT | Consumer Staples (Retail) |
| Wells Fargo & Co. (added to) | WFC | Financial (large bank) |
Long Stock Position Liquidation
As indicated above, I have liquidated my entire stock position in Arch Resources (ARCH), a coal production company from the Energy Section, which had been my largest individual stock position until this liquidation in March 2023. This position had more than doubled in value over the course of my ownership of slightly more than one year, in addition to having also yielded premium from long call and short put trades (while resulting in a near wash on net covered call premium). This liquidation was based on a desire to take profits before they could become undone in the midst of a sector rotation out of the energy sector. I continued to maintain long stock position within the energy sector with Range Resources (natural gas) and Devon Energy (crude oil and natural gas), with these positions amounting to less than my previous position in Arch Resources.
I decided to strike a re-balance between and within sectors in this manner because I believe that the energy exploration industry, while having some long-term staying power for oil and gas, had already experienced its most near-term expansion in the early post-COVID reopening period and in the immediate aftermath of the Russian invasion of Ukraine. I also believed that the coal sub-sector within the energy industry was the most tenuous because of increasingly hostile environmental restrictions even relative to other types of conventional energy sources.
Long Stock Position Additions
During this same period, I have added to my pre-existing long stock position in Uber Technologies (UBER). I made this additional acquisition at a time when Uber experienced one of its typical short-term price declines, which as usual soon reversed. I continue to believe that Uber has solid long-term growth prospects, along with corresponding prospects for capital appreciation. It may face short-term recessionary headwinds to the extent that it is considered to be a transportation company, but as a soon-to-be consistently profitable technology company with an expected high-but-not-exorbitant P/E ratio, it should become more in favor as interest rate hikes are paused and eventually reversed.
During this same time period, I have also aded to my pre-existing long stock position in Wells Fargo (WFC). I made this additional acquisition at a time when Wells Fargo, along with almost every other bank stock, experienced sharp downward price movement due to the emergency of the limited financial crisis for mid-sized regional banks precipitated by the failures of SVB and Signature Banks and the difficulties of First Republic Bank. As these banking issues later appeared to be confined to the limited sub-sector of mid-sized banks without appearing likely to spread to the financial sector at large, Wells Fargo and its large bank peers enjoyed a quick resurgence. I continue to believe that Wells Fargo has prospects for medium- and longer-term stock price appreciation as a continuing turn-around story (following the various irregularities under prior management) that is well-capitalized and profitable in a challenging economic climate.
At strategic times after the acquisitions of these additional shares in both Uber and Wells Fargo, I have written covered call options against these lots of stock, along with covered calls for my existing positions in both companies.
Short Cash-Secured Put Options Related To Existing Long Stock Positions
I have closed at a profit my prior short cash-secured puts in Advanced Micro Devices (AMD), Shift4 Payments (FOUR), and Ollies’ Bargain Outlet (OLLI), based on the increase in the share price of all of these companies during the holding periods for the short put options. Although I was willing to be assigned on all of these options if they appeared likely to expire in-the-money, it appeared that assignment was very unlikely. Therefore I closed all positions to free up the underlying cash for other trades while retaining most of the net premium initially collected.
With this underlying capital having been freed, in addition to the outright acquisition of additional long stock shares in Uber and Wells Fargo indicated above, I have sold new cash-secured put options for Shift4 Payments (Four) (one of the companies in which I closed a prior short put position), Piedmont Lithium (PLL), Tesla (TSLA), Planet Fitness (PLNT), Paypal (PYPL), and Roblox (RBLX).
After having opened the short put position in Planet Fitness during this time period, I have already also closed this short put position at a time when it was profitable to have done so but when it appeared to me that the market would be entering a short-term decline that could have eliminated this profit.
Closed Covered Call Options At Profit
During this period of March and April 2023, I closed covered call options at an acceptable profit in Uber (UBER) (2 times), Paypal (PYPL), Freeport McMoran (FCX) (2 times), Global Foundries (GFS), General Motors (GM), Cleveland Cliffs (CLF), Shift4 Payments (FOUR), Roblox (RBLX), Wells Fargo (WFC) (2 times), and Range Resources (RRC). In turn, to date I have written new covered call options for most of these shares as an initial matter. I have also opened a new covered call option for DVN, which followed the closure of a previous covered call option during the prior period. During the most recent cycle for multiple turn-over options, I still have shares for Freeport McMoran, Roblox, Global Foundries, and Cleveland Cliffs now available to have covered call options written against. These option sales will await additional stock price appreciation, with an intended targeted RSI level of between 40 and 60, depending on the near-term prospects for the underlying stock.
Rolled Over Covered Call Options
Also during this early 2023 time period through February, I rolled over covered call options that were not otherwise sufficiently profitable for AirBNB (ABNB), Advanced Micro Devices (AMD), Amazon (AMZN), Cleveland Cliffs (CLF), Shift4 Payments (FOUR), Global Foundries (GFS), Ollie’s Bargain Outlet (OLLI), Citigroup (C), Wal-Mart (WMT), and Piedmont Lithium (PLL). Among these, the covered call options for AirBNB, Amazon, Cleveland Cliffs, Roblox, Piedmont Lithium, and Shift4 Payments were rolled-up, insofar as the new covered call options that I wrote for the same underlying stocks were at higher strike prices than the corresponding recently closed options.
It should be noted that the large number of roll overs for covered calls was necessitated by the sharp run up for stocks overall in January and February 2023. These actions with my covered call options allowed for capital preservation of appreciated underlying stock. Some of these new options are still in-the-money or even on occasion deep-in-the-money, but not as much so as they were before the roll over and before the most recent February pull-back in stock prices.
This high quantity of rolled-up options clearly limited the capacity for generating net covered call premium during the time period involved. This limitation was mitigated somewhat by more frequent than usual (on my part) closing purchases of covered call options when profitable at less than the usual targeted amount (i.e., 40% to 50% instead of 67%) and the delays in closing and re-opening these calls at advantageous times with shorter term “swing trades.” The confluence between strike prices and underlying share market price for the companies that were the subject of these roll-ups also are believed to make future options trades that are more likely to be profitable according to relatively shorter time frames without the need for precipitous declines in underlying share prices. This arrangement thus may well result in better collection of options premium in future time periods.
As always, any investment and financial views expressed in this article are offered solely for informational and educational purposes and are not intended as investment, financial, legal, tax, or any other type of advice, for which readers of this article should seek individualized advice from specialized professionals before taking any investment or financial action.
Stock Market FIRE.com 
Leave a comment