Our Ocular Call Is Set to Expire as Market Struggles
We’re a bit handcuffed when it comes to making moves in our small-cap portfolio.
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Markets are struggling yet again on Friday. The portfolio, as readers can see, is down to about $92 in cash. Hence, I am kind of handcuffed in what I can do right now, unless I sell a few shares of something. Anything.
The problem with that is two-fold. One: I don’t want to sell anything that we already have in inventory. I already sold the more expensive stocks (on a per share basis) that were in the portfolio in preparation for lower stock prices so I could add to our core positions. That cash has now almost entirely been deployed.
Secondly, while this is a margin account where I can short stocks and write options, I don’t want to set the example of buying equities on margin for our readers. Sure, there are times when it might make sense to do so. However, in a $10,000 portfolio where the folks who read us might be following along and perhaps trading with our moves, others might not have access to a lot of dough. Maybe they just don’t like taking on a lot of risk. For those investors, buying equity on margin, especially during periods of increased volatility, is to invite possible trouble.
If I were willing to add some cash to the portfolio or make purchases on margin, or if I just made clear what I might do for the Sarge-folio on Friday, I would very likely add more size to the long position in Ondas Inc (ONDS). I might also bring SoFi Technologies (SOFI) and Evolv Technologies (EVLV) up to round numbers.
What I Am Going to Do
Nothing.
That, however, does not mean that the portfolio will not change at all by Monday morning. We have one covered call contract in Ocular Therapeutix (OCUL) expiring on Friday evening. That would be the July 17 $9 call. Should OCUL close below $9, that call will expire worthless and we’ll take our $0.90 profit passively.
On the other hand, should OCUL close tonight above $9, we will be called away on 100 shares at $9. With what we sold the call for, it would be a net $9.90. The shares are currently trading around $9.10. Anyone of us would be happy to sell something worth $9.10 for $9.90, so that would not bother me at all. It just means that we actually won a round. Additionally, this would also create some much-needed cash for next week.
Portfolio News
Smith & Wesson Brands (SWBI)
On Friday morning, analyst Mark Smith of Lake Street reiterated his “buy” rating on SWBI along with his $16.50 target price. Smith is rated at 3.5 stars out of five by TipRanks. Over the past two years, he has a 46% success rate and has generated an average return of 4.4%.
Thursday’s Intentions vs Thursday’s Actual Trades
Intention: Purchase 10 shares of (INSG) at or close to the last sale of $7.49
Actual trade: Bought 10 shares of INSG at $7.46
Intention: Purchase 25 shares of (RXT) at or close to the last sale of $4.11
Actual trade: Bought 25 shares of RXT at $4.08.
Friday’s Intentions
Allow, if it happens, the portfolio to be called away on 100 shares of OCUL, at $9.
Current Positions
Long 150 shares of (ALTO) at $5.51. Target price: $8. Last sale: $5.64.
Long 80 shares of EVLV at $5.8959. Target price: $8.50. Last sale: $5.63.
Long 40 shares of INSG at $8.2863. Target price: $11. Last sale: $7.61.
Long 200 shares of (OCUL) at $8.271. Target price: $11. Last sale: $9.13.
Short one OCUL $11 September 18 call at $1.65. Last sale: $0.22.
Short one OCUL $9 July 17 call at $0.90. Last sale: $1.28.
Long 300 shares of ONDS at $8.6489. Target price: $14. Last sale: $6.38.
Long 30 shares of (PL) at $27.0367. Target price: $46. Last sale: $22.28.
Long 60 shares of RXT at $6.4529. No target price. Last sale: $4.10.
Long 145 shares of SOFI at $15.9559. Target price: $24. Last sale: $16.94.
Short one SOFI August 21 $20 call at $1.02. Last sale: $0.49.
Long 30 shares of SWBI at $15.74. Target price: $19. Last sale: $14.99.
Long 70 shares of (VELO) at $13.4723. Target price: $18. Last sale: $10.39.
Cash: $92.67.
Portfolio Value: $9,794.13, -2.1% from inception on March 24.
At the time of publication, Guifloyle was long ALTO, EVLV, INSG, OCUL, ONDS, PL, RXT, SOFI, SWBI and VELO.
