Escalating tensions in the Middle East caused oil prices to rise 8.3% yesterday, approximately 15% above Monday morning's opening level. We had options set to expire out of the money this Friday that moved into the money with yesterday's opening move. Normally we would simply roll the options, as we have done over the past month. However, with this significant move and the current geopolitical developments, we repositioned the options consistent with our investment process.
For an account of $50k and higher, there was approximately a 3–4% decline in value from the options that we closed. We then reopened trades representing approximately 1.8%–2.2% of account value that expire next week. These new trades have a spread of approximately $30 for Wednesday and $40 for Friday.
As market conditions evolve, we will continue evaluating these positions and may roll options positions as appropriate under our investment strategy. Yesterday’s repositioning reflects our investment process for managing significant market moves and aligning the portfolio's intended positioning.
A key note for yesterday’s market activity is that the accounts shifted more than our normal variation with our UVXY trade. Because of this, Interactive Brokers sent out several automated margin alerts while we were placing trades and repositioning the options. We adjusted positions, which resolved the temporary margin notifications generated during the market volatility.
Periods like this are a reminder that unexpected global events, particularly geopolitical conflicts, can create significant short-term volatility. Our focus remains on managing risk, seeking to reduce unnecessary exposure where appropriate, and making disciplined decisions rather than reacting emotionally to rapidly changing markets.
The views expressed herein reflect current market commentary and portfolio observations as of the date published and are subject to change without notice. Statements made by portfolio managers represent current opinions based on prevailing market conditions and should not be interpreted as guarantees, forecasts, or assurances of future performance or market direction.
Any performance information shown is preliminary, unaudited, and may reflect results before applicable fees, expenses, or final administrator reporting where noted. Actual investor results may differ based on fee structure, timing of contributions or withdrawals, and other account-specific factors.
This material is provided for informational purposes only and does not constitute investment advice, a recommendation, or an offer to buy or sell any security, fund, or investment strategy. Past performance is not indicative of future results. All investments involve risk, including possible loss of principal.
