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

PYPL calls sold

#SyntheticCoveredCalls Sold to Open $PYPL Nov 16th 88 calls for 1.15.

#pietrade

#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.

Liquidate!

Had a come to Jesus moment at about 2 in the morning. I realized I needed to consider dumping a lot of positions. My account size has not budged much in the last couple months… money I’ve made in options has been sucked away by too many crappy stock positions. Other than AAPL and SQ, stock has not been good to me, all #PieTrades I have tried, rather Earnings repair or from scratch, have been huge dogs.

So I just dumped almost all stock positions.

Winners: $AAPL, $SQ
Losers: $FB, $BABA, $OLED, $MU, $OLED, $YY, $AMAT

Fortunately, other than $FB, the losers were all only 100 shares. AAPL and SQ were both 200. My FB losses were minimal since I have sold covered calls for a year on 100 shares, getting that lot down to 105.00 cost average. I then had more shares added in August earnings dump.

Now I can focus on strategies that I have more control over, rather than the whims of stock prices.

I’m still in options positions in $BOIL, $GUSH, $DUST. Also long calls in $PYPL (Jan 100’s, not doing well). Sticking with pre-earnings trades in $CAT, $JPM, and $MSFT. Long stock in $PVTL, since its so cheap. And a few #VXXGame short calls, and my long running long puts, the $VXX Jan 20 puts, which have lost so much potential in this volatile year.

Dumped underwater short puts in $RH. That symbol has simply killed me, I must quit it!

Also, closed $SPX Oct 12th 2825/2850/2960/2985 condor for breakeven at 4.15.

I’m looking to exit the #SuperChargers since short strikes have been breached, in $AMZN and $REGN.

#pietrade

TQQQ pietrade

Dipping my fingers in the pie. Thanks @hcgdavis for your help. I welcome constructive criticism on my choice of ticker or strikes.:-)
STO TQQQ Oct12 66.5p @ 1.80

#pietrade

#fuzzies

Margin reduction trade, did not…

Margin reduction trade, did not have to do this but was using up a ton of buying power.

EXPE BTO the Jan 2021 125 puts at 17.80. Converting a #pietrade to a #fuzzy just for margin at 17.80. Subtracting the 2.90 and 2.95 from sales the last 2 weeks cost basis 14.88.

With 120 weeks left to trade only need 0.124 per week for zero cost basis. I will still manage these as 43-22 DTE PIE ladders, just hedged.

Also rolled Lot 2 LNG 66 cc out 14 DTE for 0.63 credit. Cost basis 63.6 now.

That’s all for me until next Thurs. unless someone points out a really good trade before then.

#pietrade STO FAS Oct12’18 65…

#pietrade

STO FAS Oct12’18 65 PUT 0.47