Herewith an overview of my performance for the quarter and a wrap-up the year. You can read the Q3 2021 Review by clicking the link below:
Summary
Early in the quarter I suffered a severe drawdown at the hands of coal producers around the time of Q3 earnings announcements. I was fully leveraged long in ARCH, CEIX, and AMR expecting investors to be impressed by the positive fundamentals being displayed in the results. Instead, management teams stumbled through their communication to the markets and investors, not knowing what to expect in the quarters ahead, took profits and allocated capital elsewhere.
The drawdown hurt but I decided to trade my way out of the hole employing a strategy of shorting non-profitable tech and momentum names who were seemingly losing their luster. In hindsight, sitting through Q3 earnings holding puts in names like PTON and ZM is obvious but at the time I can assure you it was nerve-racking. Later in the quarter being short ARKK and others mostly paid off and swing trading UVXY long also resulted in a net gain while energy and mining resource companies languished throughout the period.
Performance
Herewith the performance metrics and risk analysis for 10/1/21 through 12/31/21, according to IBKR’s reporting functionality:
Overall Performance = 6.09%
Max Drawdown = 44.68%
Peak to Valley = 10/05/21 - 11/04/21
Recovery = Ongoing
Sharpe Ratio = 0.70
Sortino Ratio = 1.35
Standard Deviation = 6.23%
Downside Deviation = 3.24%
Mean Daily Return = 0.27%
Positive Periods = 28 (42.42%)
Negative Periods = 38 (57.58%)
Capital allocation throughout the period was as follows:
A chart of daily returns per asset class is below:
Position Contributions
The top 5 individual trade contributors during the period were the following:
PTON Nov19 85 Puts contributed to 14% of the overall performance
UVXY common contributed 12%
ZM Nov19 270 Puts contributed 6.2%
ARKK Jan21 100 Puts contributed 5.8%
ZM Jan21 110 Puts contributed 5.4%
Bottom 5 trade contributors:
ARKK Nov19 110 Puts contributed to -3.8 % of the overall performance
NVDA Jan21 255 Puts contributed to -3.0%
CEIX Mar18 40 Calls contributed to -2.9%
CEIX Dec17 40 Calls contributed to -2.8%
QQQ Nov19 380 Puts contributed to -2.7%
Underlying Contributions
The top and bottom performers by underlying equity can be view in the following graphic:
Contributions by sector and asset class are below:
Looking Ahead
Since starting The Coal Trader and publishing my trades and performance in real time on 7/1/2021, my portfolio is up 187%. As we begin 2022 I am going to continue the strategy of shorting non-profitable tech and momentum names while being long energy and mining resource stocks. This paired approach should allow me to utilize sufficient leverage, albeit in a hedged manner, to duplicate 2021’s positive results.
I look forward to sharing the journey with subscribers each day and hope I can continue to add value for The Coal Trader readers along the way.
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great result! waiting for your article about arlp =)