I take it FOMC was not good. Away from my desk for a few hours and everything green turned red, very Christmasy!
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.
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 🙂
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.
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.
LNG 1 DTE rolled out to 8 DTE at 62 cc for 0.45 credit. Cb 59.58
Hope everyone is having a good week 🙂
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.
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.
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 🙂
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.
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.
Now the proud owner of shares in all the above via short puts. Buying weekly put flies and selling calls or call credit spreads to cover cost of put fly. Using profits to buy more shares on down days. So far so good. This strat is keeping me out of trouble and allowing me to focus on family for a while.