WallStreetBoyzInvestmentFund

SemesterPortfolioReport
Producedby:
StevenDinh
JordanAhid
RandallNguyen
PhatTran

WallStreetBoyzManagementTeam:
(featuredonWallStreetJournals:30under30)

StevenDinhFinancialReportSpecialist
Credentials
:Stevenisa3rdyearManagementandBusiness
EconomicsmajorattheUniversityofCalifornia,Merced.Aside
fromhisschoolwork,healsoservesastheChiefFinancial
OfficerfortheCollegesAgainstCancerorganizationon
campus.Hismainroleistopreparethereportsthatwillbe
containingallofthefinancialdataandinformationrelatingtothe
teamsportfolio.

JordanAhidSr.FinancialAdvisor
Credentials
:Jordanisa3rdyearManagementandBusiness
EconomicsmajorattheUniversityofCalifornia,Merced.Inhis
sparetime,Jordanmanageshisownportfolioandiscurrently
servingasthePresidentoftheInvestmentCluboncampus.
Hisresponsibilitywaskeepingupwithupdatednewsand
speakingwithotherinvestorsaboutpotentialstockstoinvest
in.

RandallNguyenFinancialAnalyst
Credentials
:Randallisa3rdyearAppliedMathematicswithan
emphasisinEconomicsmajorattheUniversityofCalifornia,
Merced.HeisalsocurrentlyservingastheDirectorofEvents
fortheAssociationofComputerMachinerycluboncampus.
Randallscontributiontothisprojectinvolvedinputtingand
calculatingalloftradesintoaspreadsheetthatcontainsallour
ofhistory.

PhatTranTechnicalAnalyst
Credentials
:Phatisa4thyearEconomicsmajoratthe
UniversityofCalifornia,Merced.Heiscurrentlyservingasthe
PresidentoftheprestigiousorganizationcalledAlphaPhi
Omega.Phatiscurrentlyinchargeofcreatingallofthe
numericalrepresentations,usingadvancesoftware,intheform
ofgraphsandchartstobeincludedinthereport.

Introduction

WhenwefirststartedtheInvestmentcourse,mostofourgroupdidnothaveany
priorinvestingexperience.Allweknewwereprimarilythebasicsoftradingstocks,as
wellasonlyknowingthewellknowncompaniessuchasNike,Amazon,Apple,andthe
listcontinues.Wedecidedtotakeamoreconservativeapproachwithourinvesting
strategybecausewewerentexactlyrisktakers.Westartedoffbysimplingbuying
stocksandholdingthemuntilthepricewentup.Unfortunatelythatwasabadstrategy
becausewhencompaniesreleasedtheirquarterlyearningsbackinMarch,mostofthe
stocksthatwepurchasedweretanking.Wesufferedanegativelossforthefirstcouple
ofweeks.BytheendoftheMarch,wewerein2ndtolastplace,accordingtotheclasss
ranking.Wedecidedthatifwewantedtomakeacomeback,weneededtotakeamore
aggressiveapproachtoourinvestingstrategyandmakedecisionsthatwerealittle
moreriskier.
OneofourriskiestdecisionwasbuyingaputoptiononApplestocks,sincewe
hadareliablesourceinformusthatApplecouldpossiblyreportunderperforming
earningsinApril.Toourbestluck,thiswastrue.Withonemajortrade,weskyrocketed
from7thinourrankings,to3rd.Weinitiallyinvestedroughly$271,000intotheput
options,butafterwecompletelysoldourcontracts,wegeneratedatotalof$637,000
withanetprofitof$366,000bythenextday.Thisplayedouttobeourfinaltransaction
ofthesemester.Butformostofthesemester,wetookaveryconservativeapproach

withourinvestingstrategybysimplywaitingforthemarkettotank,purchasestocks
frommultiplecompaniesandhopingthattheirvaluewillgoup.

GraphicalAnalysis

Afterthreemonthsoftrading,ourteamendedwithatotalreturnof41.22%.In
ourinitialreport,wesaidthatweweregoingtotracktheNASDAQindex.When
comparingNASDAQandourperformanceoverthethreemonths,weclearlycansee
thatourteamdidbetteroverthelastfewweeks.Whenwefirststartedourportfolio,the
marketwasonadeclineduetobadearningreportsfromcompanies.Thiscausedour
stockstogonegativeforafewweeks.Wethenslowlyclimbedbackuptopositive
earningswhencompaniesstartedtodobetter.Thisstayedconsistentfortheremainder

ofthefirstquarter.ItwasntuntilrecentlythatwehadasourceinformedusthatApple
wasunderperformingduringtheirfirstquarter.Thisinformationallowedustobet
againstAppleandwewereabletoprofit$366,000afteroneday.Thisprofitallowedus
tojumpfromabout6%toa41%totalreturn.

HistoryofTransactions

CapitalGains

PortfolioAnalysisofBest/WorstTrades
BestTrades
Threeofourbesttradesofthesemesterincludedpurchasingputoptionson
AmazonandApple,alongwithapurchaseofsixhundredcalloptionsofPowerShares
QQQTrust.OneofourfirsttradesoftheyearwastheputoptiononAmazon,an
internetbasedretailertradedontheNASDAQ.TheoptionwaspurchasedonJanuary
28th2016at$20.05percontractandsoldonFebruary2nd2016for$47.75per
contract,witharateofreturnof138.15%.Amazonreportedearningsafterthemarket
closedonJanuary28th,thiswaspartofthereasonthetransactionwasinitiated,dueto
thecompanysvolatilityafterearningsreportsandthefactthatthestockspricewas
extremelyhigh,evenforAmazon,madeusconfidentthatthisinvestmentwouldbeboth
smartandprofitable.Thisstockdefinitelyoverperformedforus,especiallyconsidering
thefactthattheoptionwasboughtwhenthestockpricewasatabout$635andsold
fourdayslaterwhenitwasatabout$552.Thistransactionessentiallydoubledourinitial
investment,butsomethingwecouldntaccountforwashowmuchthestockprice
continuedtodropafterwesoldourcontract.ByFebruary9th,Amazonsstockpricehad
droppedanother$70to$482whichwouldhaveexponentiallyincreasedourprofitshad
weheldontothecontractandsolditatthatprice.
AnExchangeTradedFund,orETF,thatistradedontheNasdaq,QQQtracks
the100largestcompaniesthatarelistedontheNasdaqmarket,andtherefore,
basicallyiftheNasdaqwentupforthatday,QQQstockwouldgoup.Purchasedon
March8th,2016for$1.63percontract,QQQscontractpriceincreasedto$2.39bythe

timeitwassoldonMarch11th,witha46.63%lifetimerateofreturn.Themarkethad
beentrendingupwardasawholeatthetime,sothistradewaspurelyamomentum
basedinvestmentwherewetriedtomakeaquickreturnanditworkedinourfavor.
Therewerenofactorssuchasearningsreports,oranyothersystematicchangestothe
market,thatwentintoourdecision,otherthanthewaythemarketwastrendingand
thereforethesecuritywasonparwithourexpectations.Eventhoughwereceived
nearlya50%return,someofourotherderivativetradesgaveusover100%returns,so
duetothehighreturnratesthatoptiontradingcansometimesentail,andourtempered
expectationsfromourreasoningbehindthetransaction,theinvestmentdidnotexceed
expectations.
OnApril26th,ourgroupdecidedtoemployahighrisk,highrewardstrategyin
ordertoincreaseouroverallreturn.Apple,atechcompanythatsellscomputers,
phones,software,andmore,andhassubsidiariessuchasBeatsElectronics,wasabout
toreport,andbasedonrumorsofdecliningiPhonesales,wegambledthatthecompany
wouldpostdisappointingearnings.Afterpurchasing500putoptionsfor$2.92per
contractand500putoptionsfor$2.50percontract,Applereportedsubparearnings
afterhoursandsawtheirstockpricetumblefrom$104.35atclosingonApril26thto
$96.00atopeningthenextday.Shortlyafterthemarketopenedthenextmorning,the
contractsweresoldforfor$6.85and$5.90respectively,nettingaprofitof$366,500or
arateofreturnof135.24%.Withthevolatilitythatcompaniesusuallyhaveafter
earningsreportsarereleased,theinvestmentwassimplyabetonwhichdirectionthe
pricewouldgo.WithApplesslowinggrowth,theirdecliningiPhonesales,andour

overallnegativeoutlookofthecompanysreport,wewereconfidentthattheright
decisionwasbeingmade,butwestillwerentpreparedforhowmuchofareturnwe
receivedinsuchashortamountoftimeandthereforetheinvestmentexceededour
expectations.
WorstTrades
NoteverythingwentsmoothlyfortheWallStreetBoyzhowever,astherewerea
fewtradesthatdraggeddowntheoverallreturnofourportfolioformuchoftheyear.
Threeofourworstinvestmentsoftheyearallcameviaoptiontrading,illustratingthe
potentialdownsideofthesekindsofinvestments.Allofthesetradesoccurredfairly
earlyinthefirstquarteroftrading,andmostweresoldinamasscleansing,ofsorts,to
ourportfolioinorderforustostartfromscratch,howevertheystillproducedhefty
losseswhichiswhytheyarebeingincludedinthisreport.
ThefirstoftheseunprofitabletradestooccurwereourputoptionsonBuffalo
WildWings,Inc.Thetradeitselfwasdonewithdecentreasoning,thecompanywas
abouttoreportearningsandwethoughtthatwithalessthanstellarearningsreporton
topofrumorsofanecolioutbreakinsomeKansasstores,thatthestockpricewould
sink.Duetothis,ourgroupdecidedtopurchasetwoputoptionsonthedayBuffaloWild
Wingswassettoposttheirearningsafterhours.Therestaurantandsportsbar
franchise,specializingintheirchickenwingsandsaucesandspanningtheUnited
States,Canada,Mexico,andthePhilippines,didindeedexperienceadropintheirstock
price,however,whereourgroupmadeitsmistakewaswhenchoosingastrikeprice.
Thestrikepricewechosewas$135dollars,whichinhindsightwasmuchtolow,

especiallywiththeshortamountoftimeweactuallyheldthecontract.Hadwemadethe
strikepricearound$143dollars,whichwaswhatthepriceoftheunderlyingstockwas
whenwepurchasedtheputcontracts,wecouldvemadeaprofitwhenthepriceofthe
stockdroppedto$139persharefivedayslater.Insteadwewereforcedtokeepthe
contract,hopingforamajordropintheunderlyingstockuntilfinallygivingupon
February12thandsoldourcontractsat$1.01percontractafterpurchasingthemfor
$7.20,incurringan85.97%lossintheprocess.
Thenextoptionourgroupinvestedinthatyieldedhighlosseswasaputoption
onWaltDisneyCompany,amultinationalmassmediaandentertainmentconglomerate
thathasitshandinalmosteverythingtheentertainmentindustryhastooffer.From
themeparkstotelevisionandmoviestoradio,thisBurbankheadquarteredcorporation
hassubsidiariesrangingfromthelikesofMarvelEntertainment,Lucasfilm,Pixar
Animation,andmanymoretobroadentheiralreadyhugebrand.Disneyposted
earningsonFebruary9th2016andafterreportingstrongoverallrevenuebutaweak
outlook,especiallyintheirsubsidiaryESPNwhichhasseenitsnumbersdeclinedue
topeoplecuttingortrimmingtheircable,theirstockdroppedfrom$92.32to$88.85the
nextday.OurmistakewasusingthetheoryofPostEarningsAnnouncementPrice
Driftinordertomakeourdecisiononwhatactiontotakewiththestock.Wedecidedto
buyfiveputoptionsonDisneybecause,accordingtothistheory,evenafterearnings
havebeenannouncedthestockpricewouldcontinuetomoveinthesamedirection.So,
essentially,sinceDisneyreportednegativenews,itwastherightmovetoassumethat
thestockwouldcontinuetotrenddownward.Inourcase,thisprovedtobeuntrueand

afterweboughttheputoptionsonFebruary10thfor$1.40acontract,theunderlying
stockjumpedto$92.91byFebruary16thwherewedecidedtotryandlimitourlosses
andsellourcontractsfor$0.30apiece,givingthisinvestmentalifetimereturnof
78..57%.Collectively,theWallStreetBoyzreallyhadhighhopesforthisinvestment,
andthefactthatitdidntworkoutintheendwasahugedisappointment,whichiswhy,
eventhoughaccordingtoourrateofreturnitwasoursecondworstinvestment,the
Disneyputoptionsunderperformedmorethananythingelseinoureyes.
OurfinaloptiontradethatbackfiredonuswasforWholeFoodsMarket,Inc.,a
supermarketchainthatisknownforsellingorganicproducts,andisactuallytheUnited
Statesfirstcertifiedorganicgrocerystore.OurlossesintermsofWholeFoodswas
simplyduetoadaytradingstrategythatdidntworkoutandbeingunsureastohowto
proceedwiththeasset,lookingbackatit,ourgroupshouldhaveneverinvestedinthe
securitytobeginwith.Atthetime,WholeFoodssrelativelystrongearningsreporthad
causeditspricetogofrom$28.87pershareonFebruary10thto$30.90pershareless
thanaweeklater.Theplanweemployedforthisinvestmentwasthatthestockwas
possiblyovervaluedorthatsomeinvestorswouldlockintheirprofitsandthattheprice
wouldcomedownThereforethestockshouldgodownandwewouldincursomeprofit
fromthatdaysmovement,ifthestockweretocontinuetoclimb,wewouldsellitatthe
firstsignoftroubleandminimizeourlosses.Afterbuyingtwoputoptionsfor$0.22per
contract,thelatteroccurredandwemadethedecisiontolimitourlossesandsellboth
for$0.09percontract,ourlossonthisinvestmentturnedouttobe59.09%.Notice,
however,thatthisisnotasbadasthelosseswesustainedintheBuffaloWildWings,

andDisneydeals,thisismostlikelyduetoourswiftnessinsellingourposition.The
underlyingpriceofthestockwouldcontinuetoincreaseinthedaysandweekstocome,
reaching$31.76bythenextday,andahighof$33.92byMarch9th.Thus,theday
tradeendeduplimitingourlosses,savingusfromamuchworserateofreturn.
Analysis
Ifwecoulddothisoveragain,theonlythingwewouldchangewouldbetotake
morerisksfromthebeginningandnottosecondguessourselves.Thereweremany
timeswhereourgroupwouldbethinkingaboutpullingthetriggeronaslightlyrisky
investmentandwewouldtalkourselvesoutofitandmissoutonahighreturn.Wewere
muchtooriskaverseinourinitialinvestmentstrategywhichcausedustomissoutona
lotofopportunities.Evenouroptiontradesatthebeginningofthesemesterwerefora
verysmallamountofcontracts.ItwasntuntiltheQQQandAppletradesattheendof
thequarter,whenwerealizedwehadnothingtolose,thatwereallyplungedandtook
somerisks,andendedupreapingtherewards.Itssodifficulttotellhowthemarketis
goingtogofromdaytodaythatourbeginningstrategyoffindingstocksthathadpretty
muchbottomedoutandhadnowheretogobutupdidntreallyworkouttoowell
becausetherewasreallynothingwecoulddoaboutthesystematic,ormarketrisk.We
werebetteroffeitherwaitingforearningsreports,gamblingonwhethercompanies
wouldreportgoodorbadearnings,andthenbuyingoptions,orevenemployinga
straddlepositionbasedonourdecisionsorpurchasingoptionsonthingslikeETFsthat
trackedthemarket,thendoingdaytradingonthoseinvestments.Thesealternative
strategiesmayhavebeenmoreriskythanouroriginalplan,butwewerelosingmoney

onthatsafeplananyway.Ourlaterstrategyhadamuchhigherexpectedreturnthan
theoriginal,nottomention,inthecaseofdaytradingandstraddlingrespectively,ithad
thepotentialtolimitourlossesandprovideakindofinsurance.

Conclusions
Oneofourkeytakeawaysfromthisexperienceisthatwewouldneverknowhow
themarketisgoingtobehave.Thebestwecandoismadeaneducatedguessand
safeestimates,buthistoryhasshownusthateventhesafestinvestmentstrategycan
stillgetyouburnedinthisrealm.Inaddition,averyimportantlessonandstrategythat
wehaveobtainedistoalwaystryanddiversifyyourportfolio.Investingtoomuchinone
certainassetcanbeextremelydeadly,especiallywhenitdoesnotperformthewaywe
wantitto.Ifwediversifyourportfolio,thenegativeperformanceofoneassetwouldnot
haveasubstantialimpactontherestofourportfolio.
Ultimately,participatinginthesimulationwasagreatexperienceandoneofmost
influentialpiecethatwegotfromthisisthatthereisalwaysgoingtoberisk.Whether
youinvest$1,000,000or$1,000,thereisalwaysachanceforyoutolosemoney.This
createsastrongimpactonourdecisionstoultimatelyinvestinthefuturebymaking
surethatwecomprehendandcalculateallofourpotentiallossesandgains,both
numericalandmentally.Asmentionedinclass,somepeoplearemoreriskaversethan
othersandcanendurepunishmentfromthemarket,butotherscantandwontputtheir
moneyintoasystemthatisunpredictable.Withthatbeingsaid,thekeythingthatthis
simulationandclasshastaughtusaboutinvestingistoalwaysconsiderthe

unexpected,keepadiverseportfoliowhenyouinvestandunderstandthatthestock
marketisnotsomethingyoushouldtakelightly.Youcanwakeuponemorningasa
millionaire,orgotobedknowingthatyouhavenothingleft.