CCIP (Covered Call Investing Portfolio):
- This portion of the portfolio seeks to utilize a combination of covered calls and cash-secured puts to target an annualized return of approximately 20%
- The portfolio is allocated based on a projected annualized return basis along the following guidelines:
- Projected Annualized Returns of 10-20%: 27.5% of Portfolio
- Projected Annualized Returns of 20-40%: 35% of Portfolio
- Projected Annualized Returns above 40%: 25% of Portfolio
- Cash Allocation of 2.5%
- In order to keep to these allocations, the portfolio is rebalanced after options expiration on a monthly basis
- If a position is closed between options expiration days, then a new position is established based on the current projected returns of the remaining positions
Naked Put Investing Portfolio (NPIP):
- This portion seeks to use naked put options to act as an income generating hedge for the CCIP
- Naked puts will be sold with an intended exposure of approximately 150% of the existing CCIP
- Target returns for the naked puts will be an average of a 5% annualized return, with downside protection of at least 20%
- The options in this portfolio will generally have lifetimes of at least 3 months, and at the most be 1 year in length
Thus far, the combined portfolio CCIP/NNIP has produced results that have reduced overall volatility, and performed better than the market during downturns. The intent of this portfolio is not and has never been to consistently "beat the market." It is instead intended to provide consistent positive returns on an annual basis. It is this investor's opinion that most investors tend to get hung up in targeting extremely high returns in short period of times, and lose focus of long-term compounding growth.
As usual, I will be interested in hearing others opinions of this strategy. I will now be posting the current NNIP portfolio as well as notating in each post whether a new position is for the CCIP or the NNIP.
