#spycraft version 3.2 Ok guys…

#spycraft version 3.2

Ok guys (and gals). I did a bunch of research over the last 2 weeks. With the market volatility I wanted to restart these trades and also want the consistency back. My trading has been all over the map the last 14 weeks. I used to belong to a service that used this tactic exclusively but I dropped out after I thought I knew everything there was (wrong I still could not contain the max loss trades). Anyway, I was able to find results and trades going back to 11/14/14 to present. I had most from the service up until last year but was able to find a track record up to just a few weeks ago. I will spare you the details but the numbers are still impressive and include some wicked volatility spikes. I looked at every trade and if I had questions about the close used thinkback to see where prices were for opening and closing. Yes it was a lot of work but worth it.

Trades were placed every Friday during that time.

A total of 6 losing trades over that time but only 3 went to full loss. You can probably guess the dates (2 in August and 1 in December of 2015). Surprisingly Feb. 2018 did not result in a loss. The other losses were shut down early and I think that is what saved the service from having major losses. There were a few that were closed early either for a scratch or only a few pennies within the opening price.

Over that time the trades made 563.2% total returns.
78% annualized returns.
93.9% win rate, expected win rate was only 84% confirming what a lot of TT has proven. There is your “edge”.

So anyway I am restarting these in 3 smaller accounts, all under $7500 and one with only $1500 with the goal of doubling the account yearly.This most recent year they had 299% returns. I plan to manage it very mechanically but there are other options for those that want to do it differently.

Here are the rules and some guidelines to be consistent and prevent the big blow outs that can happen with credit spreads/Iron condors.

1. This is designed for SPY but would also work on SPX or /ES for those with larger accounts. However other tickers may even be better. I am sure IWM, QQQ, DIA would all work. I will use SPY.
2. 1 trade opened each week, usually Friday but since I am off Thursdays that will be my trade day.
3. Most of the time open an IC with short strike deltas around 16. However may leg in when the market is whippy.
4. DTE 21-56 but most often will be 3 weeks to 5 weeks. I plan on starting 21 DTE.
5. Run it as a ladder, each week will add a new rung.
6. 2-5 points between strikes. Need to have a little room there for adjustments but will also bring in more credit but keep the risk reasonable. The service mostly used 3-4 wide on the strikes. I will use 3 at first to not use up too much margin.
7. Keep enough cash available to make adjustments or close early. You will probably need enough cash to either buy back half of your shorts or add half as many long options between the strikes.
8. Delta neutral hedge when needed to create a back ratio. I personally will be using 2:1 but a ratio of 3:1 or even 4:1 may work depending on how early you catch it.
9. Expiring options that look like they really will close OTM will be allowed to expire thereby saving commissions. However, a lot of the time they will be closed early if there is enough profit.
10. Options that are close to being ITM will be rolled to new series.
11. There are probably 3 ways to control risk when the short option goes ITM but I am using a hard rule for this now. As soon as the short strike is violated I will do 1 of 3 things. This based on some TT research that showed violated credit spreads return to their range less than 2-20% of the time. If the strike is violated, you are probably in a trending/directional market at that point. These also depend on how much time to expiration. If there are a few weeks will go directional. If in expiration week will just shut it down.

A: buy back half of the short options creating a 2:1 back ratio. Then if we keep moving, you make some money from
the directional kick.

B: If I don’t have enough cash for that then I will just close the violated spread. In TOS you can probably set a
conditional order that would get you out for a 1.5-2 x the credit.

C: Add some long options between the strikes in same ratio as A, 2:1. This may be cheaper than buying back
the short strikes. Since SPY has 0.5 strikes would go 1.5 strikes from the short on a 3 point spread.

That’s it. We know this works, just have to control the losses and I think that is the key to success with this tactic. Let’s see how it works again with the hard rules for adjusting.

Credit spread tweaks

EOG STO the 21 DTE 97/98 ccs for 0.23. Cb now 14.41 against a 120/120 and 125/126 put #fuzzy
EXPE STO the 21 DTE 117/118 ccs for 0.20 credit. Cb now 9.43 against a 110/110 put #fuzzy.

It rained over the weekend and my family was busy so I watched a bunch of tasty trade re-runs. 2 things I forgot about. They did a section on defined risk and looked at the number of times tested credit spread returned back to the level you placed the spread. It was less than 2:10 times, actually I think as they looked across multiple occurrences and it was much lower around 2%. So gave me an idea for credit spreads and #spycraft which I will start up again next week after some CC are called away.

I will be very mechanical in adjusting credit spreads now. As soon as the short strike is breached, I will delta hedge it to neutral and create a back spread. Odds improve that if it is breached will not return to that level so at that point you have a directional trade and might as well take advantage if it.

What this means is that if the short strike is breached, I will buy back half the # of shorts calls/puts as the original credit spread thereby creating a 2:1 back ratio. Then if we keep moving in that direction you get the boost from the directional kick.

Probably best to set these up 21-45 DTE so you have some room. A weekly probably would not work as well once ratioed because of the gamma effects close to expiration.

Reading posts a lot of…

Reading posts a lot of us are under water on a lot of tickers. Out on a bike ride I had a thought. Obviously selling below the cost basis a snap back rally you then lock in your losses if assigned.

I have been saying it for a while but have yet to do it, sell ATM call credit spreads. Bring in a little income, if the market rockets upward you are long stock, short an equal # of calls, but then have the same number of calls long or any ratio you choose. No cap to the upside.

Personally I am going to do this on my TQQQ trades with the next roll. Roll down right to ATM and then be long net calls for free.

Probably not the best to do these with weeklies, I would go out 30-90 days to give them some room. Then if you want back in the stock, let your long calls exercise.

As for my losing put #fuzzy, duh on my part, I should be selling CCS spreads all the way down. We reverse and I will back ratio them. The problem is I always do it too late. From now on if I sell a delta 20-30 and it reaches delta 30-50, that is the point I will back ratio and hopefully get a directional kick. If nothing else at least reduce the max loss.

Thoughts? Other ideas?

#atomicfuzzy, #callcreditspread

Lots of trading and work,…

Lots of trading and work, not much profit. The #fuzzy trades hold up well but since I am so far out in time and so far ITM on some of these now, not much income or fast theta decay. Had I known we would be in a full bear I would have unhinged them and would be collecting profits now.

#fuzzy
EOG 110/110 puts are now way ITM. Market makers are being greedy. I have an order in to roll the 29 DTE out to 43 for 0.45 credit but no one will take it. If I can’t roll it will reset or shut the entire thing down for about a 6 point loss as it gets closer to expiration. Hoping for at least a little bump in oil prices. cb 14.64
EXPE 125/126 and 120/120 rolled the 15 and 22 DTE out to 36 and 43 DTE for a total of 2.1 in credits. Cb now 9.63.
GILD 70/70 nice bump today. Cb 8.48 and will roll in a few weeks.
MU 35/35 cb 14.80. Getting dragged down further into the black hole by AAPL.
WDC 40/40 cb 19.11 same as MU.
XBI 80/80 cb 13.97
LNG 50/65 cb at 14.54
GILD lot 2 67.5/69 cb 8.9
Most of these are out 15-22 days before further rolling.

#pietrades
TQQQ 50 cc at 57.60 cb. Will either roll to a leap in 2 weeks or hope for rebound. IRA so I can sit on it but would like to be generating some income.
TQQQ lot 2 50 cc 58.10. Same story.
LNG 61 cc expires next week, cb 57.7 and if expires ITM will be first real winning trade in 13 weeks.
LNG lot 2 61 CC cb 58.53 sam as above.

#lizardpies
SQ 55.5/55.5/56.5 straddle expires tomorrow rolled down to strangle 54.5/55.5/56.5 for 0.49 credit. Total credit now 2.04 with cb of 53.46 if assigned and no risk to upside.

I really think the jade lizard will be an excellent tweak to the #pietrades and possibly increase returns another 10% annualized. As I unwind some of these other trades will be putting more of these on.

I also need to be much better at directional trading!!!!

As I have said before, the income will not keep up with the drops, as much as the market is a 50-50 proposition, the more I trade the more I realize being right on directional makes a huge difference to the success of a trade and profits in general.

Happy New Year!

Good riddance to trading in 2018. I survived but given the SVXY melt down in Feb. and the last 3 months did not make any money, in fact flat for the year at the same levels I dropped to in Feb. Some accounts up a little, some down but the total portfolio basically flat.

However, as much as I thought I knew I learned a lot more, thanks to a lot of people on this site.

Some fairly decent changes and adjustmentswill be made to my trading for next year. The biggest changes will be changing my directional bias early, always keeping a portfolio hedge (but not until VIX drops and options are cheaper) and bringing in more income with proven strategies.

You will see a lot more #lizardpies using either straddles or strangles depending on the ticker, #unhingedfuzzies, #spycraft will be resurrected but with a hard rule for adjustments based on deltas/gamma, and a lot more synthetic trades to capture directional moves. This may include #riskreversal or outright #synthetics.

Cheers to a new year, new opportunities, and the collective ideas of the group making us all more successful traders!

Chris

GILD #fuzzy. Rolled the 70/70…

GILD #fuzzy. Rolled the 70/70 18 DTE out to 39 DTE for 0.56 credit this morning at the open. Cb now 8.48.

EOG #fuzzy 110/110 leap puts….

EOG #fuzzy 110/110 leap puts. Rolled the long out to 2021 for additional 3.20. Cb increased to 14.64 but now have 107 weeks to manage it.

#pietrades LNG 61 cc rolled…

#pietrades

LNG 61 cc rolled out 2 weeks for 0.74 credit. Cb 58.53

Lot 2 62 CC rolled out 14 DTE to 61 cc for 0.53. Cb 57.7

Might have a few more later in the day

#fuzzy

Question for @fuzzballl as I…

Question for @fuzzballl as I am debating closing some #fuzzy for tax purposes or keep them rolling.

Have a few that are way ITM now. Wish I had ratioed them in Oct. but too late now. Since you seem to be the only one with enough patience to take these to the end here are my questions

1. About how long does it take you to scratch the trade one ITM?

2. Seems like the best way to get any decent premium is to sell 43-45 DTE and reset at 22 DTE. Have you found that as well?

3. Once the new series of LEAP comes out does it make sense to roll the longs to the new leap for $3-4 or hang on to the one you have until the end?

Thanks!

I am debating taking some tax losses and resetting vs. hanging with the ones I have.

I tend to learn something…

I tend to learn something every down turn. This one is no exception. Will keep it short and sweet.

1. Always keep a hedge on. Whether that is VIX futures, SPX puts, /es put or puts on your portfolio. I calculated my SPX hedges that I closed 3 weeks before the market sold off, each contract peaked at 43k Christmas eve, I had 2. That would have more than offset my losses and given me a pile of cash to trade or pay off my mortgage. I think going forward I will sell some leap puts on something I want to own and use the proceeds to cover hedges for an entire year. Call it the house paid for lottery ticket. If it even pays off once a year is worth it. Even once every 2-3 years it will pay for itself.

2. When direction starts to change, quickly ratio your spreads for the directional kick. Perhaps as early as delta 30.

3. Long stock set up a 30 dte synthetic short. Sell 1 atm call on your stock and buy just as many atm puts. At least then your losses are capped and may be a lottery ticket again. Good idea for IRAs.

4. Always keep some cash handy for opportunities like this.

5. Once a spread is deep ITM, probably better to close it and start over. Commissions are low enough now even at TOS that I probably should have reset 3 of my #fuzzy.

6. Volatility creates opportunity but also sometimes wide spreads and trouble trading. What you thought was liquid not so much when the SPX is down 300 points. Better to have the adjustment on early.

7. Not sure the bear is over but today helped all my positions so I will start looking to unwind when I can. Market drops give you a chance to reset trades.

8. Once a bottom is put in go syntheic long and don’t cap your gains!!

Hope everyone else is recovering and has some cash ready 🙂

Finally some what appears to…

Finally some what appears to be short covering rally. Even if santa is a few weeks late I will take it 🙂

Merry Christmas Eve!

Did not think I would trade today but the continued market puke fest took all the time value out of a few of my positions.

MU rolled the 18 DTE 40/40 #fuzzy out to 39 DTE for 0.33 credit. Cb now 14.8. I suspect there is a lot of tax loss selling in the this and WDC and hope they will rebound in the new year.

I have some EXPE trades in the cue but the market makers are being greedy.

Also, even though my equity curve is now down, in my core account I have generated 17% cash returns over the last 12 weeks. As @kathycon I believe said below, equity is lower but cash is higher. Good to have some cash to use but this time I am waiting until I see a shift.

Maybe, just maybe that was the bottom this morning. The VIX spiked to 33.38 and hopefully that will mark the low. I was personally thinking we needed a vix spike 30-50 before a bottom. Of course it could go much higher but the last major dips were done when there was real panic.

Merry Christmas

So much for the Santa…

So much for the Santa Claus rally this year. I hope some of this is tax lot selling and we rebound in the new year.

I will be adjusting more positions next week when we re-open.

Merry Christmas everyone!

Alphashark tool market tide indicator.

After figuring out a rough number of how many want the tool Bryan has given the go ahead.

Just send him an email directly. Bryan Klindworth and his email is bryan@alphashark.com. Tell him you want the tool and the special pricing and are from the Options bistro. They will then give you a special link to purchase at the discount.

Not sure how long he will leave it up.

Can install in a few minutes on TOS and there are also recordings of mentoring sessions.

The only catch is the first person to buy it has to spend $299. Everyone after that gets it for $249.

Happy Trading! You directional guys will probably love this but it only works on time charts, not ticks or range charts. Just something to be aware of.

Merry Christmas, think I am done until next Thurs.

#lizardpies Just converted the SQ…

#lizardpies

Just converted the SQ trade below into a jade lizard. STO the 55.5/56.5 ccs for 0.44 credit. No upside risk if we rebound and lower break even now 52.08. Widens out the break even on the downside, no risk to upside.

Lots of adjusting but not…

Lots of adjusting but not making anything, just staying flat. Brutal market, I am officially only 2 k above where I was Feb 2018 after the SVXY losses. Obviously need to change what I am doing, need more directional trading as income investing cannot keep up with 10-20% moves. 2018 is going down as a worse year than 2015. Hope everyone else is doing better than surviving. Even the increased volatility is making it hard to roll.

#pietrades
SQ STO the 56.5 8 DTE put for 1.11. CB 55.38 if assigned but I am most likely going to roll it. Actually it is now down 3+ and will roll it now. Moved to 55.5 15 DTE for 0.22 credit. Break even now 52.52.
LNG 61 cc rolled out to 15 DTE for 0.61 credit. Cb 58.10
TQQQ lot 1 60 cc rolled down to 50 cc 43 DTE for 0.80 credit. Cb 58.10
TQQQ lot 2 60 cc rolled down to 50 cc and 43 DTE for 0.70 credit cb 57.60
LNG lot 2 15 DTE 61 cc cb 59.27

#fuzzy
EXPE 125/126 rolled 43 DTE for 0.55 credit. cb now 12.23
EOG 110/110 rolled out 43 DTE for 0.4 credit. cb 11.44
GILD 67.5/69 rolled out 43 dTE for 0.69 credit cb now 8.90

May plan going forward. The now deep ITM #fuzzy will roll the short options out to 43 dte then reset after every 3 weeks. Hope to keep chipping away and if the delta/gamma becomes too large to roll for credits will either close or roll up/down. As long as I can gain 0.4 every 3 weeks will run them to expiration. Still have 108 weeks on most.

For the #pietrades that are below cost basis will aggressively roll up at any sign of rebound to avoid being run over and locking in a loss.

As cash builds from the rolls may either sit on it or add to weekly #pietrades depending on what the market is doing. However I think getting short here is stupid. Any progress on a trade deal with China and I think we rebound big time. Not to get political, but I think the GOP is starting to see how bad tariffs are (layoffs, increased costs, and now crashing market) and to keep their jobs will pressure to get a deal done.

Trade smart or sitting on the sidelines for a while is also a viable option. Wish I had just kept my hedges on, I would be pulling out huge amounts of cash now. Another expensive lesson learned.

#s

I take it FOMC was…

I take it FOMC was not good. Away from my desk for a few hours and everything green turned red, very Christmasy!

#pietrades

MU #fuzzy Rolled the 40/40…

MU #fuzzy

Rolled the 40/40 down to 35/35 for debit of 2.10 then credit of 0.88 so cost basis now 15.13. Its a dog but weekly premium is good so I thought I would stick with. Have 108 weeks to break even or hopefully make some money on it.

MU and WDC both went from being my best perforning tickers all year to my worst in just 10 weeks.

Not advertising here and I…

Not advertising here and I am not getting anything out of this but some local trader friends wanted the Alphashark market tide indicator. I spoke with Bryan who developed it and negotiated a deal. First copy $299 but any additional copies for $249 and no limit. It retails for $999 on their website. I have been using it for 2 months now and would gladly pay retail now that I know how well it works.

Here is a screen shot with just the indicator and a market profile.

2017-12-01-TOS_CHARTS

He did not want me just randomly posting the link so if you want it send me an email or let me know here and I will send you the special purchase link for the discount.

Cheers, Chris

At the lows, do we…

At the lows, do we finally get a Santa rally or drive further off the cliff.

I would not mind the seasonal Santa rally but so far has not looked like it is going to happen.

Trade smart and don’t drink too much eggnog!

Rolling a bunch this week

#fuzzy
EXPE 125/126 7 DTE rolled out 21 for 0.40 credit. Cb 12.78
EOG 110/110 7 DTE rolled our 28 DTE for 0.55 credit. Cb 11.84
MU 40/40 7 DTE to 21 DTE for 0.40 credit. Cb 13.91
WDC 40/42.5 7 DTE to 28 DTE for 0.51 credit. Cb 19.58.
GILD 67.5/69 1 DTE to 21 DTE for 0.76. Cb 9.59

Still have 109 weeks to manage these and some have already been reduced 25-50% from original cost. For pure ROI looks like #fuzzy may win especially when volatility kicks up.

#pietrades
LNG 62 cc 1 DTE rolled out 7 DTE for 0.74 credit. Cb 58.84

All told $1860 of credits for the week. Another week or 2 will have enough cash to start the #lizardpies test using 1-2 contracts. After 8 weeks of being flat finally bringing in cash again to use for new trades.

I plan to try to take a few of the #fuzzy all the way to expiration just to see what kind of actual/real world returns you can get over a year. Currently looks around 100% annualized. With the exception of WDC. may end up closing that as soon as I can break even especially if it keeps dropping.

Have a great weekend 🙂

#fuzzy GILD 70/70 3 DTE…

#fuzzy

GILD 70/70 3 DTE rolled out to 17 DTE for 0.53 credit. CB now 9.78 and 109 more weeks to go. This one already up 1.01 per contract if I closed it now.

WDC #doubledip Rolled the 11…

WDC #doubledip #fuzzy

Rolled the 11 DTE 40/47 down to 11 DTE 42.5 for 1.04 credit. cb now 20.09. 109 weeks to manage but this one has been such a dog lately I will probably scratch it once I can break even.

Why I sell options-last 2…

Why I sell options-last 2 days whipsaws, dow down 800 points yesterday, recovered. Today down another 485. All of my tickers are down but because of theta decay my core account is up. Wrong on direction but still making money.

I salute those of you that successfully trade directionally but these are the times that make me realize that being the house always wins in the long run!

However, some stability would be nice…….have a great weekend.

Vix finally moving up quickly,…

Vix finally moving up quickly, possible bottom, there is a lot of volume here over the last 30 days on volume profile. Who knows but if it breaks this level probably a lot more downside.

Going for bike, should know when I get back.

Rolls

Trying to get back to selling weeklies, better returns in real time confirmed by my account balances. Taking a credit of 0.4 every week works out to $2080 profits for 52 weeks vs. 1.2 x 12 months only works out to $1440 or 37% better return. So anyway, even with the gamma risk the decay is much faster on weeklies and the #pietrades concept works so now I am trying to apply it to all other trades, #fuzzy, #coveredcalls etc. to increase income. Last 8-12 weeks had gone out 21-45 DTE on expirations to help deal with the volatility. Trying to pull everything back to weekly now. I know TT shows 45 DTE works best but not according to my account balances.

#fuzzy
MU 40/40 8 DTE rolled out to 15 DTE for 0.53 credit. Cb now 14.16
WDC 40/47 8 DTE rolled out to 15 DTE for 0.27 credit. Cb 21.13
GILD 67.5/69 1 DTE rolled out to 8 DTE for 0.61 credit. Cb 10.35. I really wanted to let some more time decay but doubt I will have time to trade tomorrow. Starting to see flu so the office is really busy. Get your flu shots if you have not had them yet.

Added 1 more at lunch time, EOG 110/110 8 DTE rolled out 15 DTE for 0.30. Cb 12.39

Still have 110 weeks to manage all these. The #fuzzy trades handle the volatility better than anything else I have on at the moment.

#pietrades
LNG 1 DTE rolled out to 8 DTE at 62 cc for 0.45 credit. Cb 59.58

Lots of expirations next week and week after. Should free ups some cash to try a live #lizardpies and maybe @elitethink short iron fly tactic, small lots on both.

Hope everyone is having a good week 🙂

@elitethink Spy example with a…

@elitethink

Spy example with a 30 point spread. Based on math, the straddle is selling for 7.6 next Wed or 1 week and 4 x that would be 30 points. So here is an example on a 30 point wide iron fly.

2017-12-01-TOS_CHARTS

Second graph shows an adjustment if it dropped to 262, now of course the prices would change but shows a flattening of the risk curve.

2017-12-01-TOS_CHARTS

I know this is not what you are doing but just trying to get the basic math down.

So if the first graph is correct, at what point do you adjust?

Interesting idea

Stop at 9.3 debit, then add next spread in same expiration or going out to next expiration? Obviously at this point one side would be winning.

This is kind of my idea with the #lizardpies, sell the straddle to make as much decay as possible, hedge the upside, cash secured on put side.

Yeah, post the live trades, I am interested in how it works live in the market 🙂

Maybe the leveraged products are…

Maybe the leveraged products are not so good for options. We definitely saw that with SVXY. TT has done some new research.

Obviously the advantage is a lot of them are priced lower than SPY so can use in smaller accounts.

https://www.tastytrade.com/tt/shows/market-measures/episodes/trading-options-on-leveraged-etfs-11-26-2018

Also, finally had time to read the optionsellers.com debacle. No one will mange your own money better than you. I think everyone here knows that. I read their book, actually good but maybe naked strangles on futures not the best idea.

Figured with a quiet trading day would pass this along.

Bipolar market again, either buy…

Bipolar market again, either buy everything or sell everything. Anyone have a sign for that? The only thing saving my accounts is large positive theta decay, $300+ daily no matter which way the market moves.

Platform upgrade

Tradestation released version 10. For anyone using it I suggest you update. Faster, more stable, looks like easier trading and all your tools will automatically transfer, just make sure you click yes for the import. Looks like they are trying to catch up with TOS.

Cheers!

Rolls and adjustments

#pietrades
TQQQ 63 cc rolled out to Jan 19 60 for 0.70 credit. CB now 58.4
TQQQ lot 2 65 cc rolled out and down to Jan 19 60 for 0.70 credit. Cb now 58.75

Just sit on these until rebound. If not will convert to #fuzzy later.

LNG 65 CC rolled down 8 DTE to 62 for 0.96 credit. CB 60.03 so will let assign next week. My plan with this account is to then start a live #lizardpies.

LNG lot 2 expires in 3 weeks at the 61 CC for cb 59.27. Same as above but will change ticker.

My #pietrades for the next few weeks will be LNG, GILD, EXPE, EOG, XBI, SMH. A few others I am watching but these will be the core trades for a while. Want to see chips and a few other names stabilize before adding.

#fuzzy
LNG 50/65 rolled out 43 DTE for 1.03 credit. Cb now 15.31 and 110 weeks left.

I have not taken a LEAP all the way to expiration in several years but I may do that with some of these smaller accounts to see what kind of annualized returns I can achieve. Hopefully 50-100% or more.

Have a ton of contracts expiring in 15 and 21 DTE so sitting on hands until then. At that point will add a few more live #lizardpies as I roll the #fuzzy and free up some cash.

4 things I noticed with the latest correction. If you own the stock can sit on it long term but the losses are much larger on paper than with spreads and takes a lot longer to get back to even.

The spreads help navigate the corrections and are easier to adjust, but everyone here probably already knew that.

Using longer options with the #pietrades 21-43 DTE prevents a lot of assignments and easier to roll. Also helps handle the volatility easier.

Once VIX settles down (under 15) will always leave on an SPX or /ES hedge lottery ticket to cover about 10% correction for the account. Probably finance it by selling a LEAP on something I want to own long term.

Finally a slight bump in my equity curve after being down/flat for the last 8 weeks 🙂

Since we are on experiment…

Since we are on experiment discussion below again, here is one I have been paper trading. A twist on #pietrades. If we need a new term we could call them #lizardpies.

So obviously with the market rout all my #pietrades went ITM and to prevent a meltdown in margin I converted them all to #fuzzy. Which is great, has controlled the volatility and still have 111 weeks to manage them. But as @fuzzballl points out below, they are expensive. Cheaper than stock but my EXPE puts are now trading at 22.40 and 19.50. Not chump change.

The #pietrade idea is sound for income generation and even some capital gains long term as long as you sell the call ATM or OTM once assigned the stock. You also are typically only selling 1 side and as Karen the supertrader (now scam artist) figured out, selling the other side is what really improves long term returns and consistency. She may have been using some creative accounting but the idea is sound and has been proven by tasty trade.

So here is the tweak I have been playing with. When you set up the trade, start it as a #jadelizard but set it up ATM. For example with XBI currently at 78.02 I would sell the 10 DTE 78 puts naked (cash secure) and then sell the 78/79 call credit spread. Total credit 2.55. No upside risk, downside break even is 75.55 which is lower than where I probably would have just sold the put.

3 possible outcomes
a: below 78 assigned shares on the put at 78 but cost basis 75.55. Can sell a next week call or call credit spread if you think rebound, then uncapped upside
b: Between the strikes max profit and you may be assigned on the call but can exercise your long call if needed.
c: above 79 everything cancels out and you keep the credit minus $1.

Here’s a graph on a 10 lot.

2017-12-01-TOS_CHARTS

I have been trading it on paper and it would have had better loss control on the #pietrades than straight put sales the last 2 months.

Thoughts, holes in the strategy, other ideas to tweak it or make it better? If you wanted to be more conservative could sell strangles OTM instead or straddles ATM on the short sides but then less credit. Since my premise is income, I am trying to bring in as much credit as possible on the front end.

#coveredcallcampaign, #vixindicator

Only 1 trade today

#fuzzy
EXPE rolled the 125/125 put spread down to 120 for net debit of 0.95 bringing cost basis up to 13.18. Fair trade off as I can collect more credit on rolls now ans still have 111 weeks to manage. It was too far ITM to collect any decent credits on rolls.

Happy Thanksgiving everyone!

Going to burn off some of these calories now.

#fuzzy GILD rolled the 3…

#fuzzy

GILD rolled the 3 DTE 69 call out 16 DTE for 0.96 credit. Cb now 10.96 on this batch and still have 111-112 weeks to manage.

Have a great Thanksgiving!

#fuzzy GILD rolled 4 DTE…

#fuzzy

GILD rolled 4 DTE 70/70 out to 25 DTE for 1.02 credit.

Cost basis now 10.31 and still have 112 weeks to manage.

Starting to agree with @fuzzballl, the extra time on these makes it a lot easier to ride out market volatility.

However, I am trying to trade them #pietrades style to keep cash coming in. Seems to work, I doubled my cash balance in the core account with just 2 trades this morning (was not much to start with, only $1100). But now I have enough to add some more contracts somewhere at better prices 🙂

So much for the Santa Claus/holiday rally?!

Ouch on the /NQ.

Rolled EXPE 12 DTE 125 put out to 29 DTE for 0.65 credit. Cb now 12.33 on the 125/125/126 #fuzzy. I may actually roll it down later and take out some built up credit.

EXPE #fuzzy 125/125 7 DTE…

EXPE #fuzzy 125/125 7 DTE put rolled out to 28 DTE for 1.00 credit. Cost basis now 12.88.

Since this is a put spread if it keeps dropping I will roll it down to 120 or 115 soon and take out some credit.

As I said earlier in the weeks, spreads are easiest to manage at the moment, even easier than stock because you can adjust up and down.

Bonus day off and the weather is better, going to clear a trail then mt bike it.

Have a great weekend, I am done for the week.

GILD

Added batch 2 in a different account that had some cash left.
#fuzzy 70 2021/70 8 DTE for 11.33. 113 weeks to hopefully sell against.

Market still whippy. Picked up kids and /NQ down 50+ from the highs.

/NQ chop fest.

Tried to take a few more directional trades, entered at nice signals on my tools, absolute reversals on every signal even going to a 5 minute chart and signals. Swinging from -40 to + 52 in a matter of minutes. After loosing $900 for the day am done with the directional trades, at least on /NQ.

/ES not a whippy but still staying away from picking a direction until it is obvious on a daily chart again.

All I want for Christmas…

All I want for Christmas is a Santa Claus rally 🙂

Adjustments, just doing my best to bring in income to offset the continued chaos.

#supercharger
TQQQ 40/45 BTO for 4.50 sold for 3.75. Trying to keep this account from being wiped out so taking a small loss before it became worse. Going long term with what’s left on a GILD #fuzzy.

#fuzzy
GILD 2021 67.5/69 next week for 11.92. Have 113 weeks to manage.
EXPE 125/125/126 rolled the 1 DTE 126 out to 15 DTE for 1.00. CB now 13.88 and as above 113 weeks left.
XBI 2020 80/85 15 DTE rolled down to 80 at 43 DTE for 1.91 credit CB now 14.63. 61 weeks left to manage.

#pietrades
LNG 63 cc tomorrow rolled out 43 DTE and down to 61 for 1.97 credit. Cb now 59.27.

Bizarrely MU is up, go figure?!
As @kathycon said below, market is defying all patterns and seasonality this year, not quite and exact quote but close. Does the VIX need to spike to 50 before the selling is done? Who knows, trade smart, preserve capital, there will be big opportunities soon enough.

If the whippy settles down later my try some directional trades before the day is over.

Good luck, stay safe!

And the winner is:

#fuzzies during the market volatility. Makes sense, the spread offsets both sides and the income from selling options helps cushion the drop.

Trying to get back into #pietrades but market not really cooperating at the moment.

I am not the directional…

I am not the directional guy but while eating lunch /NQ just pushed to new 20 day lows on a 5 minute chart and bounced fairly quickly. Not saying this is a bottom but on market profile there is a lot less volume here so any reversal is likely to snap back to 6865 fairly quickly.

What is @fibwizard showing?

Next big levels above that are 6977 and 7104. Big volume at the 6977 level.

Friday clean up

Had some things expiring and others just out of time value so #rolling, closing, adjusting.

TQQQ CC 63 rolled out to 42 DTE and down to 61 for 1.55 credit. CB now 59.10.
TQQQ lot 2 CC 63 same as above. Cb now 59.45.

QQQ 7 DTE 150/155 #supercharger sold to close for 4.92. Bought for 4.52 so about $132 profit on a 3 lot.

New TQQQ #supercharger 21 DTE 40/45 bought for 4.50.

Now just sitting on my hands until next week. Wish I had time to trade /NQ this morning, that would have been profitable.

Have a great weekend 🙂

EXPE rolled the 126 puts…

EXPE rolled the 126 puts that expire today out 15 days for 1.85. Cb now 13.03 and have brought in $4750 in premium in 4 weeks on a 10 lot #fuzzy and still have 805 days left.

This is a good one for #pietrades but if they go wring converting to a #fuzzy also seems to work.

Hope everyone else has a good expiration and weekend 🙂

WDC adjust at the close

Rolled the 22 DTE 47 call out to 43 DTE for 0.74 credit. Cost basis now 21.4.

EOG reset

This one got away from me as I chased the short puts up as it made it almost to 130. Now back down to 104 so I had a mess and was long the 115 2020 outs and short the 36 DTE 120 puts. Rolled the entire thing down and out so now have the 110 long 2020 puts and the 43 DTE 110 puts. All said and done the shorts cost me 7.85, I had a credit of 2.82 for the long roll down, adding that to my cost basis of 7.66 I now have a total cost basis of 12.69 but no margin requirement.

Will keep selling and may eventually convert it to 2021 if it stabilizes.

Now I am done for a while, trade smart!

Some short covering created a few more trades.

#fuzzies

MU rolled the 40/40 22 DTE out to 43 DTE for 0.66 credit. cb now 14.69
WDC 40/46.5 8 DTE out to 22 DTE and up to 47 for 0.38 credit. cb now 22.14

Will try to roll these back up and stay ahead of them going deep ITM. If I can’t will ratio.

Now going for bike, hopefully another 1k of decay will happen in EXPE and can roll them when I get back.

#pietrade tweak I am considering….

#pietrade tweak I am considering.

On the initial put sale, I may pair jade lizard with them. Bring in a little extra income, if it does not hit the short strike keep the additional income.

Then if assigned on the put, instead of selling straight CC may sell a call credit spread. Then if called out you may also get a runner on the long calls. Or if nothing else will give you the ability to ratio it if moving around a lot.

As I experiment with this will post results. In looking at more recent trades it certainly would have helped.

Currently #pietrades yield about 30-40 percent annualized on cash accounts, 40-50% on margin. Trying to bump that up a little and at the same time reduce risk.

Light Thurs trade day

Yesterday rolled EOG 115/120 #fuzzy out to 36 DTE for 0.51 credit. Cb now 7.66

Today XBI #fuzzy 80/90 rolled down to 85 and out to 29 DTE for 0.49 credit. Cb 16.54 now

#pietrades LNG lot 2 CC 66 rolled down to 63 and 15 DTE for 1.15 credit. Cb now 61.24. Hoping it will assign so I can restart #pietrades on this account.

Have some expiring tomorrow but with the volatility they are holding on to their premium. EXPE 125/126 short puts on a #fuzzy are sitting ATM and still traing for 0.90 and 1.90. With 10 contracts want to capture a lot more of that decay before I roll.

The hedges worked well, the uptick certainly helps but finally starting to take some profits out of the 12k of premium I had sold over the last 3-4 weeks. Another week or 2 and all that premium should find it’s way to my accounts as long as we don’t implode again.

Once VIX settles down will put the SPX hedges back on. New personal rule, anytime VIX is 12.5 or under will keep SPX hedge on. Maybe 1-2 times a year have a winning lottery ticket. This year would have paid out twice, Feb and now!

Looking at the futures there…

Looking at the futures there may be a short squeeze rally developing. Won’t really know until 2 pm when the margin requirements kick in but if it stays up until then I would expect buying into the close instead of selling.

WDC

More like a falling hindenberg than a falling knife. Actually at this level not a bad dividend. I am working on rolling the #fuzzy down but don’t have time to update at the moment.

Hope everyone has a good weekend.

/nq

Fresh sell signal on 15 minute into close. Shorted at 7020 out at 6960 so profitable for the day.

Seems like the big moves occur early and late in the the day as people move stuff around to avoid margin.

#rolling and recovery Scalped a…

#rolling and recovery

Scalped a few more trades on /NQ and gave back my gains. But learned that 15 min and 30 minute chart is probably ideal for scalping. 1 and 5 minute too much chop. I will be adding some more directional trades and using my tools.

#fuzzy
XBI 80/97 rolled to 80/90 for 0.49 credit. Cb 17.84
LNG 50/66.5 rolled to 22 DTE 65 for 0.49 credit. Cb 17.84
XBI lot 1,2,3 closed for losses totaling 620. With only until Jan 2019 and hardly any cash in this account did not think it was worth trying to recover and losing more.

#pietrades
LNG Lot 1 66 cc rolled down to 65 and 43 DTE for 0.83 credit. Cb 60.99
LNG lot 2 66 cc rolled the same for 0.9 credit. cb 61.00

#supercharger all I had left for in this tiny IRA.
QQQ 22 DTE 150/155 for 4.53. Will have to manage if we drop more.

Channeling @fibwizard With the volatility…

Channeling @fibwizard

With the volatility trying a few futures scalps. Full disclosure, I have done this before, just my job does not allow me to do it on work days. Off today, daughter home sick so figured I can make some money back. Entered at the green arrow but set stop to tight and triggered out 3 bars later while I was making breakfast for a $205 loss. But re-entered close to the lows as the signal is still valid. Will hold until I get an exit signal on the 15 minute chart.

#hedge Wish I had kept…

#hedge

Wish I had kept my SPX hedges on. A $3 put that I had on at 2550 is now trading for $21.40-22.

Most months you never need it. Last few weeks it is almost a mega millions or power ball ticket.

Once we settle down I will always keep one of these on. Either long puts, ratio, or risk twist for times like this. Then you have a pile of cash you can deploy when the market tanks.

/CL

BTC the the 52 DTE 55/86 strangle for 0.28. Sold for 0.3 so a $100 profit after a week and at least I can say I made money on something these last few weeks.

Also freed up cash and margin for a hopeful bottom

Back to the drawing board.

Officially went flat on the year with todays drop on paper. Gave back all the profits since Feb. Obviously income investing cannot keep up with extended moves.

I am comfortable with my directional trading now but do not have the time to watch the markets all day.

Have to come up with a hybrid trading model. Core based on income investing but really need to take some directional plays to boost returns and keep up with the extended directional moves. As I generate cash with rolls will figure out how to do that better.

Hope everyone else is preserving some gains.

#spycraft If I can generate…

#spycraft

If I can generate enough cash with some rolls this week, I might start nibbling on SPY IC or at least one sided credit spreads. Would be a shame not to at least collect a few $ with the premiums being higher than they have been in a long time.

What are you guys doing?!…

What are you guys doing?! I go mt bike for 2 hours and the market is melting down again.

#rolling and adjusting. Everything hedged so not too bad on paper, still waiting for a ton of short options to decay but the volatility is keeping the prices up. Good for when I can roll.

/CL I had a stop loss on the strangle and it must have triggered early in the morning when oil was down 2. Lost $750 as it closed at 0.87. Re-entered 57 DTE strangle but went wider, delta 4s and sold the 55/86 strangle at 0.28.

LNG lot 1 66 cc rolled out 22 DTE for 1.25. Cb now 61.28
LNG lot 2 66 CC rolled out 22 DTE for 1.24 credit. Cb 62.39

#fuzzy
XBI 87/95 2019 LEAP rolled out to 43 DTE for 0.28 credit. Cb now 4.05.

Sitting on my hands for another 1-3 weeks, then big expirations which should free up a lot of cash. Hopefully things stay on sale:)

Hope everyone is doing well and making some $ on the volatility.

First time looking at the…

First time looking at the market today. That is what a short covering rally should look like 🙂

Oil trades

Taking some profits out of /cl and freeing up margin.

60 DTE 58/91 strangle BTC for 0.25. Had been sold for 0.42 but I rolled the put side down costing 900 so profit was $150 in less than 2 weeks.

30 DTE 60/84.5 stragles BTC for 0.18 sold for 0.22.

So made back my losses earlier in the year and am now + on /CL for the year by $200. Hey at least it is positive.

But here is something to think about. I re-read sections of the option sellers book, they mostly focus on selling futures options and they had 56% returns last year verified. Most years they do 40-50% and a lot less trading than most of us. They like to start ladders 90 DTE and each month add new rung.

The premiums are huge on futures. The issue is not a lot of weeklies and harder to roll. But looking at oil today the 93 DTE 58/87 or roughly delta 7-8 options. Can be sold today for 0.72 credit. Oil is $10 per 1c move per contract. So a 10 lot is $100 per 1 cent move.

Anyway at 60 DTE it has already decayed to 0.50-0.53 by 60 and 0.12 at 30 DTE. So the largest drop occurs from 60 to 30 days but the drop from 90 to 60 days is not chump change. Also can be farther OTM which usually requires less adjusting. So a 10 lot would bring in $7200 cash minus commisions and could buy it back roughly 28 days later for $5300.

At 60 days the options are roughly delta 5s and by 30 they are down to 2.

I am starting to look at this again but only for regular accounts with margin. Will not let you touch futures options in IRA etc.

I may put a 1-2 lot on /CL 93 DTE today just to watch it happen in real time.

Moving #fuzzy around. MU has…

Moving #fuzzy around.

MU has been a dog. Way below original strikes. 2021 LEAPs are out so first I attempted to roll out the Nov. 15 50 call out to Dec which brought in 0.55 credit.

Then rolled my long 55 LEAP 2020 out to 2021 and down from 55 to 40 for debit of 8.35. So I gained 15 points of down side for only 8.35 and another year to manage.

Then I did not like the 50 calls so I rolled them down and closer, 45 strike 32 DTE for 0.19 credit.

After all that My new cost basis is 16.28 and have 823 days to manage. So only need 0.13 per week to scratch it to zero.

Hopefully the VIX stays up…

Hopefully the VIX stays up while the market stabilizes. Good premiums, I see some good #pietrades (back to weeklies) if I can unwind a few positions or generate some cash on rolls.

Went for bike ride, everything…

Went for bike ride, everything had turned green. Came home thought there may be a double/triple bottom forming then it looks UGLY now!

Really wish I had kept the hedge insurance on, but way too expensive now.

Updates rolls and adjustments, just…

Updates rolls and adjustments, just trying to pull some cash out of the market until it stabilizes. Paper losses are high but everything hedged so as we approach expiration the paper losses will improve.

#shortstrangles
/CL added 34 DTE 60/84.5 strangles for 0.22 credit. On oil I have finally figured out the best way to trade it is take profits early, re-enter later if you want back in. Adjust early if it is going against you. The theta decay is wicked fast. 5 contract strangles is roughly $100 a day in decay so as long as it stays in your range you can take some profits early. Closed previous strangles last night for $900 profits in 9 days even with oil moving. Just reset the strangle this morning.

#fuzzy
WDC 60/58 LEAP cost basis 15.41. Sitting on this until closer to expiration.
MU 55/50 LEAP cost basis 8.67 so not expensive but MU has SUCKED. I will adjust it once the short options are under 0.2, soon I suspect.
EOG 115/120 put leap at 14.88. May adjust back 115 depending on where it is at expiration.
EXPE 125/125/126 LEAP cost basis 14.88. Just waiting for theta decay to kick in.
LNG 50/66.5 LEAP cost basis 17.24
XBI 95/97 LEAP adjusted to 95/95 for 0.25 credit. CB 3.37 and 99 days left to manage but this is red on paper.
87/95 LEAP cost basis 4.33 and same as above
95/95 LEAP cost basis 0.85

#pietrades
TQQQ lot 1 65 cc rolled down to 63 CC and out to 22 DTE for 1.4 credit. CB 60.65
TQQQ lot 2 65 CC rolled down to 63 same as above. CB 61
LNG lot 1 66 CC rolled out 8 DTE for 0.53 credit. CB 63.07
LNG lot 2 66 CC rolled out 8 DTE for 0.63 credit. CB 63.63.

Biggest paper losses are the 401k as it is half bonds and half stocks but I can’t trade my way around the dip in those. My 6 trading accounts are not doing too badly 🙂

Just a few observations, my accounts that are much more concentrated are doing better. Not saying put all your eggs in 1 basket, but 1 basket is certainly easier to watch and adjust.

Aggressively collecting income and rolling options helps keep cost basis down and brings in cash even when the market dumps. Also helps offset bad timing.

Picking the right horse makes a difference. I am going to pay a lot more attention to sector rotation. My oil and gas trades are saving my bacon at the moment.

Hope everyone is doing ok with this and has some cash for when a floor is put in 🙂

Did a hedge fund or…

Did a hedge fund or something blow up? The last few days are obviously not retail selling. I did not see any news about a fund crashing but that’s what these candles look like.

/CL

Closed out the 30 DTE 64/88 strangle for 0.41. $900 profit in under 10 days. Left the 65 DTE open.

Futures down big after hours so just freeing up some cash for hopefully a bottom soon.

No predictions here but I…

No predictions here but I don’t think we bounce until the VIX is in the 20s.

Only trade that is working for me at the moment is /CL. MU, WDC, EXPE, and most of the chips all suck. Good thing they are #fuzzies and still have 1-2 years to break even.

I am now flat on profits for the year in my core account but still have 12k + of decay over the next 35 days. Unfortunately they theta decay is not keeping pace with the dropping market.

/CL

Rolled the 67 DTE 63.5 put down to 58 for 0.40 debit.

I know we usually roll the untested side, but I am widening the strangle out so I can stay in it longer.

Trades and rolls.

/CL added another strangle 71 DTE 63.5/91 for 0.70 credit. Goal is to close the other one in another week, already up $900 then leave the longer one on a few weeks. The decay rates on these are about $100 per day for 5 contracts.

XBI #fuzzy lot 1 80/97 rolled out 36 DTE for 1.23 credit. Cb 18.33

LNG #fuzzy 50/66.5 rolled out 36 DTE for 1.33 credit. Cb 17.24

XBI lot 2,3, and 4 at 95/98 adjusted to 95/97, 87/95 and 95/95 rolled out to 26 DTE for 1.15 and 1.35 credits. Cost basis now 3.62, 4.33, and 0.85. Almost have a freebie, one more roll should do it but then have until Jan 2019 to keep bringing in cash.

Equity curve still flat with all this adjusting but on a positive note I have A LOT of theta decay over the next 32 days and it is all OTM at the moment so that should move the needle on the equity curve finally. Just need to sit on my hands for a week or 2 and let theta decay do its magic. Some expire next week, some week after and it all clears in 32-36 DTE.

MU #fuzzy Rolled 30 DTE…

MU #fuzzy

Rolled 30 DTE 50 call out to 44 DTE for 0.43 credit. Cb now 8.67. Briefly had a break even, need a few more rolls to put it solidly in the profit column.

Pre-market

/CL STO the 43 DTE 88 call for 0.24 for the 64/88 strangle.

Looks like it may have finally found a top.

Oil

Already closing the 84.5 44 DTE call on the strangles. Only $200 loss. Leaving the put open until oil either forms a new range or reverses. Re-entry is only a commission away.

/CL

More lawn mowing musings from the weekend. After reviewing oil trades from the last year realized all the losses were because 1 side was always run over on the strangles or IC. If I had just paid attention to direction almost all of them would have been profitable. Oil is still moving up but much more slowly and my indicators are pointing to slowing momentum and seasonality effects should also kick in. Not giving up on oil, I see the potential profits but will be much more aggressive managing these either by converting to spreads quickly or rolling the losing side out quickly.

With that in mind, sold the 45 DTE 64 put last night at 0.29. The pause this morning sold the other side 84.5 call 44 DTE for .022 for the 64/84.5 strangles.

Small size until I see how my adjusting works.

Theta boost

Rolled EOG 115 put 35 DTE out to 42 DTE and 120 for 0.96 credit. Cost basis now 8.17 and my long 115 puts are worth more than that so technically this has broken even after 6 weeks. Rather than close it will keep it rolling. Can’t say I have ever taken a #fuzzy to full expiration but may be fun just to see what happens. Everything now should be income and can probably scratch the trade in another 12 weeks.

Could probably do the same with MU but will wait 1 more week the short still worth 0.68.