Dusting off my LEAPs again...

[The_Krakenite]

Sunday April 7...

No real action the last couple weeks. Nothing much to report.

I've got TeraWulf and Argo Blockchain expirations coming due.

I'm just sitting in the back-seat on TeraWulf (WULF). The more due diligence I do, the more I like it. At this point, the last trade I see at my strike was for a penny. Though, due to the low cost of the stock in comparison to commissions, I am going to roll the dice into expiration. If the price plummets, I'm perfectly fine with taking ownership. In fact, I'm hoping for a drop in price anyhow so I can short more PUTs.

As for Argo Blockchain (ARBK), things are not so great. And the more I have been doing due-diligence, the more I do not like this miner much. It's too small, weak, and probably will go bust post-halving at some point. I expect someone else to come in and buy up all the assets eventually.

I had a chance to close still at a profit, but that window of opportunity is gone now. I was doing this as a speculative trade at the start, so I'm ok with that.

Due to the large drop of the stock, I will most likely be hit by assignment. I will take the assignment, instead of trying to close out beforehand.

After that, I have two choices. Sell the stock (maybe I can break even over-all). Or switch around to shorting CALLs and seeing if I can 'wheel' myself out of this. The premium is extremely high right now, so I am very in favour of shorting covered-calls if assigned.

Going forward, the current plan will be to keep shorting calls until I am out. The risk is that Argo ends up going woke-broke, which seems to be something many CEOs can't resist wanting to do in this day and age.

Updated and cleaned up some data in Numbers for short options:

Portfolio Balance:

Argo important notice to investors:

 

[The_Krakenite]

Sat April 13...

The good news, is there was a great sell-off on Friday.. The bad news, is I didn't quite get more fills quick enough before market close.

Three trades I did this week though. Thanks to some great bearish events.

Galaxy Digital (GLXY) - After this took a big hit early in the week, I finally pulled the trigger and shorted PUTs on this. It's been a long time in waiting, but finally made a small move here and will see what happens by March next year. Hopefully Mike Novogratz doesn't let me down.

Verve Therapeutics (VERV) - I've been looking into Crispr technology lately. Now that the bio-tech bubble popped not too long ago, I'm doing more due diligence. With some bad news regarding a test patient coming down with not-so-friendly symptoms, VEVE sold off hard recently. Time to swoop in with my first (but tiny) position.

BMO Equal Weights REIT Index (ZRE) - I purchased long-stock on this ETF. I had a limit-order sitting in the que for many, many days. Perhaps that is an indication I should have shorted another PUT instead, lol. Obviously, the news from BoC was very bearish, with interest in Canada running away and indications we are far, far away from putting the genie back into the inflation bottle any time soon. If ZRE tanks any more next week, I may add more 100-deltas

The former two trades almost fully funded the round-lot of ZRE. Still have $10K CAD in the reserve for more bullets when needed.

And now, the current standings as we head into the weekend...

Looks like my long-calls on HIVE experiment are more-so of a total flop. The good news I have until 2025 to make a profit. Granted, this could hurt more with the halving this month but... let's see what happens when there is less BTC going around to sell soon...

 

[The_Krakenite]

Captain's log: Sat. April 20...

What a Friday yesterday was! Despite getting crunched for multiple days in a row, things started to turn around the last two trading days of the week for the miners. And... the halving ended with success last night, no glitches. Sad to say for the bears...

Expiration Friday it was, and not the most favorable outcome for me. But first, the (willing) trade:

Cipher Mining (CIFR), was a first for me. During the sell-off earlier this week I decided to pull the trigger again when everything was just turning around from looking gloom & doom. I had originally wanted to add more short-puts to my WULF position, particularly since the current ones were about to expire, but had held off a little too late, and started to watch WULF rebound a little higher than I had wanted to short those puts into. Oh well, we'll wait a while to see if a good shot like that comes around again. Things have gone well for CIFR so I can't complain going this route instead.

And now.. for the unwilling:

That's not 'so' bad. My 14 WULF contracts expired OTM, and I'm ok with collecting the cash. Thank you Mr. Market.

The 10 contracts on Argos Blockchain ARBK is another matter. I was not hoping for assignment, and Mr. Market was not nice. The price crashed far below my strike, and the rebound the last two days were still short from melting back up high enough.

With that said, I am going to go ahead with my initial plan of reverting to shorting CALLs and seeing if I can unload this miner. After doing some more analysis, I am going to break this into plan A and B.

Plan A.
Short covered calls at strike of 2.5 for max premium and try to get out of the security.

Plan B.
Short covered calls at strike of 5.0 and see if I can keep selling the calls with a chance to 2x my earlier assignment cost.

Both plans will use the longest DTE options, partly due to the large slippage and commissions ratio to security value.

Here's what we have to look at:

So, starting next week I'll see if I get fills on the October contracts. At at bare minimum, I can hit the bids at .35 or .20 for the next strike.

I doubt I will have to cross the spread that low for two reasons.

Logically, I SHOULD get a fill at least near the .40 and .25 respectively.

But even more so, (and this is not a given), I am expecting prices of miners to increase substantially at market open on Monday. The halving was already priced in, but what the market didn't expect to see, was the huge increase in transaction fees due to the ordinals and runes hype. Surely, we will gap up on Monday (crossing fingers here)?

Most likely my update at the end of next week should validate this. We will see...

Current options standings:

After some analysis, this does not seem quite correct yet. Sure, my total number of short options are decreased from 165 to 147, but some numbers are still off. For example, when I look into the actual long-stock I am holding of ARBK (not present in the image shot), it incorrectly shows me the cost basis as 2.5 which was the strike. I suspect by tomorrow night (or later), IBKR will correctly add in my premium and re-adjust the true values. We shall see...

In the meantime, I will continue to do a little more due diligence on Argos. As much as I was not too much a fan of this company (yet I did a highly speculative trade anyway), there are some positive values. They did reduce substantially their debt. Well over 50% on their debt to Galaxy Digital, and even their mortgage debts in Quebec. Though, their baby bonds are untouched and so the coupons paid out will remain.

Portfolio standing:

Still holding around $40K CAD.

After the Argos assignment, I am debating on doing a deeper dive into the financials here, and with other miners I hold in the portfolio, and carrying out further financial estimates. Here is how I will start:

Of course, that 6.25 no longer applies

 

[The_Krakenite]

Captain's Log: Friday April 26...

Early this week we carried out our plan with Argo Blockchain (ARBK). I chose the $5 strike to short calls, sacrificing some premium. Was able to sell at .25 for the October contracts. If the security gets called away, great, because I will have at least 2Xed my entry price.

In regard to the slow glitch in IBKR. It looks like around Tuesday the proper adjusted cost basis for the stock was updated. So, from 2.5 a share, we're down to 1.65 a share. Phew, I feel I can trust my broker's platform again.

Technically, that 1.65 (or shall I say 1.6495032) can be reduced even lower when reflecting the .25 for the covered calls.

So, we're down to 1.40 a share (ignoring trading fees).

As can be seen, still holding a bit of cash for emergencies, etc. I am hoping for more up-ticks in Bitcoin soon, as I want to unwind some of my long calls. We're about to start the month of May now, and getting closer to the middle of the year already. The more CALLs I can unwind, the more real-estate I want to double-down on.

This week did not end the way I wanted, but I'm not going to lose sleep over it.

Current Options Positions:

I've got some orders in to get a fill on some miners with large slippage, but I'm not going to cross the spreads. I will leave them be and wait for someone else to make the move and lift-the-offer. If I don't get any bites, I'm still happy with what I already have on the books.

Portfolio Balance:

Over the last few weeks I've been doing deeper due diligence into these miners. Starting next month I will slowly begin to compile some financial modeling spreadsheets. The problem, is these miners are harder to decipher than Tesla. But, that's a good thing as there is hidden alpha in there not so easily arbitraged away.

And each miner has its own story. Just like Argo!

 

[The_Krakenite]

Captain's Log: Friday, May 3

What a week of excitement. It was quite unusual to see even so many crypto perma-bulls start to panic just before the FOMC and youtube was full of doom & gloom. Despite this, markets are doing well again on recovery today, even though the US government is in big trouble. (People were fearing worse, imagine that!)

I had some decent timing very early this week by selling off my first Bitcoin CALLs (BTCC.B). I didn't sell them all, only 10% for now, as I have been kicking myself a little for not starting to unwind them earlier. My ask got filled as a 20x-bagger, so I went and bought some new toys, leaving a bit extra in my cash-sweep.

The toys, was more real-estate. Added another round-lot to my portfolio of BMO Equal Weights (ZRE).

Things went very scary for the longs in the market after that. Right up to the FOMC. As longs were getting liquidated, and the shorts were screaming "Bitcoin is going to zero, zero, zero!", I decided to go long into the red by shorting more PUTs on TeraWulf (WULF). Since my last PUTs on this had expired, I had been looking for another good entry. No complaints there.

This is another miner I won't back down from being assigned to.

Options Positions:

Now that I filed taxes for 2023, I decided to work on better preparation for next year. As well as working on a physical log-book as well for my trades in addition to digital. It took me a few nights, but I have now updated every miner-trade since I started in this genre around the middle of last year. Also added MSTR, COIN, and GLXY in there as they are related.

$45,721.40 in capital-gains over-all. Note: This is adjusted to $ CAN.

I am going to have to update this for other securities starting next week. I need to add my full crypto ETF trades, as well as futures, and also other securities. And then, I'll have to also update the adjusted cost basis for return-of-capital, etc.

This is going to take a long time, especially since I plan to back-track even more years. But for now, I'm enjoying slowly mastering this (online) spread-sheet from Adjusted Cost Base.ca

Real FX Balance:

Future planned Trade(s):

So, I noticed last night that I was up quite a bit on my PayPal short-PUTs. Considering they won't expire until close to 2027, I am very tempted to just take the gains now and run. If the current trend continues, I will do just that. I already put in a limit-order to close them, the rest is in Mr. Market's hands.

 

[The_Krakenite]

Captain's Log: May 10th...

I checked my portfolio today and was down quite a bit. I figured something happened in the markets, but didn't see any major news. Crypto and miners were down in a sea of red again though.

I also noticed right off the bat that Value Village (SVV) was down over 20%. Looks like yesterday's earnings report after market close was not received well.

Of course, this gave me the idea to short more PUTs into it at these levels:

Shorted 4 PUTs for a premium of $440 USD.

I also added a bit more of real estate into my portfolio AGAIN with BMO's REIT etf (ZRE).

Over $120,000 in REIT units so far. Still more planned as long as the ETFs remain suppressed.

Over all, here's the derivatives standings in the portfolio for this Friday:

Capital Gains for 2024 (so far):

I have finished adding (most) of the trades for this year into my ACB sheets. Looks like I'm already over halfway to 6-figure digit income already for the year, and we're not at the half-way point yet for the year. Time to slow down... I still have the 20-bagger... 30-bagger Bitcoin LEAPs calls that when realized will push me over 100K for this year. Maybe I'll see about stalling some of it for January to minimize taxes. (But if cycle ends by Jan, this backfires spectacularly).

Realized capital gains total for the year (so far), $58,590.62

Currency adjusted to $CAD. Though, I still have to add the Futures and Futures-Options as well, so it's not complete just yet. In addition, I have a few more things to clean up. Now that I registered for the yearly paid plan, I'm going to see what differences auto-adjusting for currency exchange rates on settlement dates (day by day) does, etc.

REAL - FX Balance:

And now, back to SVV. I went through the earnings call tonight. It looks like the stock went off a cliff because of an acquisition of yet another thrift store chain (2 Peaches Group). That may have been great for the company targeted, not so much favored by holders of the company that is doing the targeting. Funny why that always is in M&A!

 

[The_Krakenite]

Weekly update: Friday May 17

A little bit of fireworks this week. Here's the recap:

I got cracked by assignment on 6 contracts for SVV (Savers Value Village). What's interesting here, is that the holder of my PUTs had all the way until the end of October before they expired. But he decided to just call up the broker and demand immediate assignment instead of trying to sell them. There was almost half a year left until expiration. I haven't done the math, but maybe due to the high slippage and unprecedented interest rates, it was worth it to them?

I also sold another 10-contracts of my BTCC.B calls. Another 20x-bagger deal. If market climbs higher, my next level is at 25x, and 30x after that. Hopefully, the news of pension funds purchasing these ETFs keeps the market bullish before these contracts expire.

I closed out all of my 10 MET (Micro Ether Futures) contracts. After sitting on them for a long time now, Ethereum just kept dipping down, down, and down. I set my limit orders and was happy to finally get out at break-even or better. Here's the math:

It's a small profit, $20 bucks Cad. However, I wasn't so much worried of a small loss here, as I was about having a bigger problem of superficial losses with my taxation documents that would get more complicated than I wanted at the moment. Too many related mixed-products.

I'm still going to leave my Micro Bitcoin futures-options on, as I wont run into any issues unless Bitcoin falls below the $31K strike.

Updated options positions:

Cash & Holdings:

With the BoC stating they are force to hold interest rates at these rates for a much longer time than anticipated, I am debating on stockpiling more cash while collecting interest as I wait.

I will probably accomplish this by collecting dividend distributions each month and selling more of my BTCC.B calls as I plan to unwind them as we get closer to expiry.

The downside, is I'll have to slow down on my purchases of real estate.

There is also growing concern that interest rates may have to go higher as well. Would be great to hold extra cash on hand if that happens.

Decisions... decisions...

 

[The_Krakenite]

Saturday Jun 1st...

Notes: Finally! I solved the 'mysterious' US dividend payout that kept showing up in my trading account. (more to say shortly).

Nothing happened much the previous week, but did a couple trades near the end of this week:

BitFarms (BITF) - There has been quite some drama on this during the month. The stock kept getting depressed and had lots of FUD which made it sub-perform to the other miners. Main reason being they are NOW trying to find their 3rd CEO in just two years. Not only that, but the CEO they just ousted is now suing the company, etc.

After doing some more due diligence, I believe the assets have a worthy moat and so I decided to short another 10 PUTs on it ending in 2026.

To even confirm my beliefs, it recently came to light that RIOT has been accumulating shares and wishes to do an aquisition. Naturally, this was rejected by the board of BITF, but it appears as though things are going to get very hostile soon. Regardless, all this is even more bullish for me. I just don't want to over-leverage here, since there is a chance (as often the case) the deal(s) will just fall through.

SATO Technologies Corp. (SATO) - Nothing too special here. I was listening again to some of the board and there may be some potential here. Unfortunately, there are no listed options (yet). So I did a small purchase of 10-lots. I was debating on at least doing 10x the amount, but prefer to just slowly scale in and see how things progress (or collapse). I'm not fully sold on it, but remain optimistic on the stock for the longterm.

There were other trades that didn't get a fill, but I'm still in no rush to cross the spread just to get bites.

End of Week Options Standings:

My BTCC.B long-CALLs are not quite where I'd like. But I'm still happy. Definitely want to unwind some if there is a good spike up. No rush...

I still bet the wrong horse/miner with HIVE CALLs, and unfortunately I feel silly now that I closed out my CME Ether futures at a tiny profit when I could have done much better by waiting. Doh! That's how it goes sometimes...

Assets:

Ghost dividend mystery solved!

For a 'long' time now I was confused why I get a US dividend time to time show up. It acts weird when trying to track down this culprit even in my trading and tax statements. Possibly I am just dumb and missing the obvious, and often I had to guess if possibly the broker was confusing futures trades with dividends, or another bug/glitch.

After some deeper analysis, theory, and due diligence, I did narrow it down to Brookfield Infrastructure Corp (BIPC). Even though it is listed as being purchased on the Toronto exchange, I had read somewhere that some people had been receiving dividends as US initially (even if broker exchanges it to CAD).

After keeping a close eye on the date the dividend now popped up again, and doing some conversion of US to CAD taking, it looks like we got a winner here. The $42 Greenbacks is $57 Loonies. So we've got a perfect match now (and timing) on the 103 shares at 0.5519 div.

With that out of the way, I feel I've accomplished a milestone, despite it's just one simple drop into the bucket of a hundred other 'mysteries' I am trying to solve on my main trading portfolio. Stay tuned for more investigative portfolio analysis.

How did I get such a wacky 103 shares? When Brookfield did their hostile takeover of Inter-Pipeline, all went to hell with a chain of spin-offs and stock-splits, etc. Ended up with 103.5 shares, after I was given various other fractions of that 103 that IBKR kept changing on me in my records.

At some point, IBKR sold the fractional share leaving the odd-lot of 103.

I'm still not certain on everything, as I can't figure out for the life of me on how IBKR is calculating my ACB, but again, that's another mystery to solve at a later time...

 

[qwerty11]

But these "miners" will all go to 0 within 1 or 2 years, so quite risky!

 

[The_Krakenite]

@qwerty11

I would certainly like to see your thesis on how sure you are on this?

Bitfarms went IPO back in 2019. That is HALF A DECADE AGO.

HIVE went public all the way back to the 2017 cycle, and many of the other Canadian domiciled miners were mining years before going IPO.

So I'm very curious on why THIS TIME IS DIFFERENT? I do remember Luxxfolio going bust, but that was already something I had expected at the time, and it was only a small player. The Merge was a success and that was the end of Ethereum mining profits. Just like that!

That said, I'd be happy to see your broker statements and look at your short positions, since it's a dead-done deal in only 1-2 years