War, Oil, and Patience

Dear Investors,

March began with a war and ended with an oil trade. Between those two events, we closed 38 trades, made our first macro bet and bought our first tail hedge. The return was modest: +2.26%. The education was not.

We entered March as a put-selling operation. We left it as something broader, something with edges in multiple directions, and the infrastructure to manage all of them without losing discipline.

The Iran Week

On Saturday of the first week, the United States and Israel struck Iran. By Monday morning, every screen was red.

We had opened positions the prior Wednesday on a handful of names across semiconductors, industrials, fiber optics, and gold miners. These were not bad companies. We entered without a volatility edge, filling idle capital because it felt productive. The gap down on Monday turned those positions into immediate unrealized losses.

The lesson was simple and expensive. The urge to deploy cash because it is sitting there is the same urge that makes people buy lottery tickets. It feels like action. It is not.

The Recovery

The same volatility spike that punished our Wednesday positions made other premiums extraordinarily rich. A memory chip maker that our scanner had flagged for weeks was suddenly offering deep out-of-the-money puts at prices we had never seen. The implied volatility was pricing in a world where this company, one of the strongest in its sector, would collapse by double digits within months.

We entered aggressively. Long-dated. Deep out of the money. High conviction.

The Hardest Trade

One of our long-dated semiconductor positions went underwater during the Iran selloff. The stock dropped, the put moved against us, and the mark-to-market loss was uncomfortable.

We ran the full analysis. Close and take the loss? Roll to a different strike or expiration? Add to the position at better prices? The thesis was intact. The company had not changed. The expiration was months away. The strike was still well below the stock price.

The answer was: do nothing.

I want to spend a moment on why doing nothing is hard. Every instinct, professional and personal, pushes you toward action. The position is red. You feel responsible. Surely there is something clever you can do. Close it and redeploy. Roll it and "improve" the situation. The options feel productive.

They are not. When the thesis has not changed and time is on your side, the best trade is no trade. We held. By month end the position had recovered most of its paper loss. Patience was the correct strategy, and the hardest one to execute.

The Oil Trade

Later in the month, we made our first macro-directional trade. The Strait of Hormuz had been effectively closed since early March. Iraq declared force majeure on oil exports. Iran struck a Kuwaiti refinery. The physical oil market was in genuine distress.

Three legs on USO: naked calls, call spreads, and far out-of-the-money call spreads. A barbell structure. About one percent of the portfolio. May expiration. The math was asymmetric: if nothing happens, we lose the premium. If oil spikes, the return is a multiple of the risk. If the entire system breaks, the far OTM leg pays an order of magnitude more.

This was a departure. We are put sellers. We collect premium. We do not make directional bets on commodities. Except now we did. And I think it was the right call, for one reason: the oil trade is uncorrelated to everything else in the book. When semiconductors sell off, oil does not care. When tech earnings disappoint, crude does its own thing. Diversification is not about owning many positions. It is about owning positions that do not move together. As of early April, the USO position is sitting at roughly 2x our entry cost in unrealized gains.

The Tail Hedge

Also in March, we bought our first SPX put spreads. The cost was less than half a percent of the portfolio. The payout ratio in a severe crash: 33 to 1. By month end this position was already positive on unrealized P&L.

The process for this hedge had been in place for weeks. We had defined our entry criteria: VIX levels, spread structure, position sizing. When the Iran volatility subsided and VIX came back under 20, the signals lined up and we executed. You buy insurance before the fire, not during it. We bought it the morning after, which is the next best thing.

This hedge is now permanent. We will roll it quarterly. The logic is clean: we sell fear on individual companies we understand. We buy it on the market as a whole. The two positions are complementary. The puts we sell generate steady income. The puts we buy protect against the scenario where everything correlates to one and individual company quality stops mattering.

Combined with the USO position, we now carry two uncorrelated asymmetric bets alongside our core premium-selling book. One profits from oil disruption. One profits from market collapse. Neither requires the other to work. Both cost very little relative to the portfolio. This is what portfolio construction looks like when you think in terms of correlation, not just return.

The LEAP Rotation

Late in the month, we began shifting some capital toward longer-dated positions on mega-cap technology names. Deep out-of-the-money puts with expirations stretching into late 2027. More time means more margin for error. A stock can dip 15% and recover over eighteen months in ways it cannot over forty-five days.

This complements the core strategy. It does not replace it. Short-dated puts remain the engine. Longer-dated positions on the highest-quality names are a way to deploy capital with a wider safety margin when the scanner finds fewer short-term opportunities worth taking. Early results are mixed, which is expected. These positions need time to work. We will report on them honestly as they mature.

The Numbers

For March, thirty-eight closed trades. Blended by capital weight: +2.26%. Since inception: +16.64%.

Returns are calculated on realized profit and loss, not changes in net liquidation value. This is a conservative methodology. It means we only count money we actually made, not paper gains on open positions.

+2.26% is our lowest month yet for 2026. That is fine. January's 7.6% was the outlier, not the baseline. March included a geopolitical shock, real capital lockup, and the cost of building three new strategic capabilities (tail hedge, macro-directional trades, and LEAP rotation). The return was earned honestly, and the portfolio is more robust than it was thirty days ago.

The goal was never to have the best month every month. The goal is to build a portfolio that makes money in most conditions, survives the rest, and quietly compounds while the world argues about what happens next.

Thank you for your continued trust. March was complicated. That is the point. Simple months are easy. The system earns its keep when things get hard.