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 🙂

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