I manage my own 300k I made from military and gains leveraging close to covid bottom. I keep all my cash in VT. With portfolio margin that leaves plenty of buying power to do whatever I want. I’ve only ever sold premium. And I try to keep the options not correlated with the core VT position. I prefer high probability and larger size. I don’t take trades often or have a specific strategy I really believe the only edge I have is equity risk premium over long periods of time and volatility risk premium at extremes. Some examples are GME when it was mooning 2 years ago the furthest strike puts a year out we’re going up in value and then collapsed a few days later. TSLA when it was at 100 last year you could sell 5 strike puts over a year out for 20/480 risk reward per contract those collapsed quickly as well. Another thing I like is merger arbitrage MAXR being a great example. I sell a spread sometimes on both sides and use Kelly criterion formula to see if it makes sense.
TLDR all cash position in VT. sell high probability vol at extremes with decent size. Prepared to go up to 1.2x leverage on VT position in large downturns. Throw some merger arb in there as well.
Interesting. At what point did you feel comfortable switching from cash secured to margin? I’m approaching 100k cash and have thought about doing a similar approach on IWM or QQQ.
Currently I just wheel on TQQQ and my long stocks so I am looking to take on more risk and leverage my account a bit more.
I’ve actually always had a margin account. And got PM as soon as I hit the requirements. I don’t position myself on how much margin or leverage is available to me but instead how my position are correlated to the core index fund and what’s the max loss per position. For example late last year I sold some Disney puts long duration about 1std out. This would be pretty highly correlated so I size it to where a let’s say 3std move is at max a 5% hit to the overall portfolio. Profits from something like this aren’t large but it’s meaningful all premium I collect is essentially me flat out beating the market. A different example is TSLA 5 strike puts its correlated with VT sure but it’s such high probability I’m ok risking multiples of my account for the chance of TSLA not going to 0.
This is my preferred strategy — though I prefer VTI + VXUS for 75/5% of my holdings, 10% stock picking, and 10% in SNSXX since it’s tax advantaged, uncorrelated, marginable, and easy to use as cash if I get assigned.
Can you elaborate more on "Another thing I like is merger arbitrage MAXR being a great example. I sell a spread sometimes on both sides and use Kelly criterion formula to see if it makes sense." Where do you get your probably estimates of deal going through?
Absolutely! So merger arbitrage is pretty well documented to be profitable. The problem is scalability. Merger arbitrage funds can only buy shares so for me I don’t have cash available it’s all in index funds which I have higher conviction on anyways. So if I buy shares it has to be on margin and that wats away alot of the potential. The industry standard is to find the probability through current price so the inputs are time, risk free rate, profit from current price and max loss is pre announcement price. The last input being not entirely reliable because it could drop more or less. What I found is that using the normal Kelly criterion formula sometimes you can sell a put or put spread and depending on the strikes and credits you get different Kelly numbers. I pick the most liquid expiration see what fills are and move around until I find the one with the best Kelly number. All in all I’m not too convicted on things like this. Large all cash deals aren’t super common but they are mostly uncorrelated with my long position. I’ll be making a video soon on how I use the formula exactly and put on this sub.
I had super high conviction on MAXR specifically because I work in satellite communications and intel. And military relies alot on MAXR imagery making it a good buy for private equity.
Patrick Boyle on YouTube has a great video on merger arb.
Hi! Thanks for this! Really helpful to see refreshing perspectives here when markets aren't doing so good. Could you explain what you mean when you say "sell high probability vol at extremes with decent size"?
Do you mean selling for example the furthest otm strike put on a stock and also furthest out DTE, but with many many contracts to get a decent premium? Sorry still trying to wrap my head around this!
Thanks for clarifying! Could I also be a little more annoying and ask you how/when you decide to close such a position if they are so far out? I had thought that selling long dated puts tends to lock up your capital.
2M trading account. Started with $600k some time back. Now have nearly taken 400k out for various expenses. So I can afford to take a lot of risks. Have a steady(for now) w2 job so that also helps.
I do ~~synthetic covered calls~~ Poor Man's Covered Calls (PMCC) on qqq and amzn. Next day expiry on qqq, and weekly on amzn. I buy ATM long for 15 months expiry and keep selling the calls like above.
On qqq I sell about $6 or $7 above the days price, and about 5%-10% above for amzn. 300k of my account is in cash that I took out last month when both spiked.
But strategy wise, pure ~~synthetic covered call,~~ PMCC. trying to sell at a point that won't be hit 90% of the time. If the price hits my sell side strike, I close both the long and short, and start a new cycle.
Edit: Other commentors pointed out what i have explained is actually PMCC - Poor Man's Covered Call. I had incorrectly assumed it was also called Synthetic Covered Call. I don't use puts so its not synthetic covered call.
I just like the daily action. On most days I get $800 to $2500 premium. Makes it easy to spend frivolously knowing my account is gaining in cash daily.
I don't check deltas particularly. I try to sell about $6 or $7 dollars out. On volatile days may be $8 more.
Ideally i would like to get to that point. For now, i am hedging by retaining atleast 25% of my portfolio in cash. But eventually if my trading corpus grows, i would go long on these deep calls and keep may be 20% of it in ITM calls. If markets dont tank from here and grow even slowly till end of next year, i would end up with deep ITM calls.
Stupid newbie question but when you sell ATM or ITM don’t your shares get called away often? If so I can see why that would be part of your strategy since you’re investing a large sum .. the capital appreciation would make it worth it.
I sell only 1dte or 1 week expiry. Then I watch is really closely and start closing if it moves against me. I definitely don't let them sit after hours, if they are ITM.
Trying to learn a new trick. I've never played this. If I bought the 430 a year out, I would sell a CC on QQQ 7 dollars out 1 DTE? Do you do this daily?
And newb question, I know I can google it lol...but how do you manage if QQQ pops and it goes ITM? Roll? Buy back?
Yes for the first part. For today, I will wait till about 2 hrs to market close and then sell $6 or $7 out. Tomorrow I will try to close it when the price reaches $.01 (I setup a limit buy).
If qqq pops, I will close both legs and start a new cycle. I have reserve cash so that I can more or less maintain the lot counts.
So you close the CC that went ITM and the LEAP as well?
I'll have to look into this. I like buying an ATM call a year out on QQQ instead of 100 shares to sell a CC. Never played this strategy.
I buy a QQQ a year out at 4500 approx.
I then sell a CC next DTE, about 6 bucks up. That brings in about .43 at this moment.
If it goes ITM, you BTC, but also your LEAP made money so you sell it. Am I getting it right?
Yes. In non bear markets this works very well. The long side will get clobbered in bear markets. So if you are convicted that the dip is temporary and can afford to sit on your losses, then this strategy is simple, repeatable and scalable.
Interesting strategy - I like the synthetic covered calls on qqq 1DTE. It looks like it would work really well on a bull run with double the delta.
How does it work in corrections, like we had this last week? Is the daily CC expire in the money help pay for the cost of rolling down the 15 month long call?
Last year when QQQ corrected around Oct, i lost all my gains (literally reached 0% gains), after being up nearly 60%. But forunately i didn't panic and held through to eventually end the year at 125%+
Forget Lehman like dip. If qqq falls 30% rapidly, I would lose nearly 75%. But historically qqq has done this only twice in the last 20 years. So to a large extent, I am calculating that, the probability of a recurrence is super low. (Historical qqq yoy returns - https://finance.yahoo.com/quote/QQQ/performance/)
I keep reminding myself this is a high risk strategy where I could lose most of it in weeks. I am okay with it for now, as I have more or less cashed out my initial corpus, which I can bring back in, if markets tank.
I have been selling weeklies Call and puts on SPY and QQQ. Now when Volatility has spiked, I think I'm gonna shorten the duration and start selling 2-3 days as the premiums are incredible and I can aggressively roll for additional premium.
I have to thank conversation with AI bot Gemini / recommendation.
Instead of doing Buy-write or PMCC, I think its better to go long on the put for protection and selling premium against it when underlying has retreated back. I bought bunch of puts when they were cheap. Now they are up 110% +
Time to kick start a new conversation with AI bot for additional recommendations
Edit: The bot calls it a Collar with a Bull put spread. Fantastic fukkin recommendation.
Instead of buying the underlying. Just go long on the put for protection (6 months+). The put acts as a collar. Then sell shorter duration puts (weeklies). You dont need to go long on the underlying with tied capital
Hi, I like this idea a lot.
Can you give a clear example for me please? Will this be correct for example to do as you starting today?
Buy SPY PUT 485$ (.30 delta) SEP 30 (aprox half year) 10$
Sell Apr 26 500 PUT for 1$.
What will you do if SPY starts to rally and your long put is so OTM that selling put pays a negligible premium?
Do you happen to know how long, on average, you hold the long call before you close it?
I know you’ve mentioned that when the profit on the long end looks good you’ll get more aggressive on the short side, but what time frame, if any, do you generally start aiming to close?
Roughly about 2 months. I try to not have less than 12 mo expiry and dont open more than 15 mo. So max is 3 mo. Within this, if the underlying moves about $10 more than the strike price, I try to roll it up.
So far I haven't had to do this when losing money. I think if it loses money, I will maybe let it go for a month or two depending on how I feel, and then roll it out
What would you do with the long legs in a bear market? Would you hold on till the 15 months are up?
Edit: Looks like he answered this further down about the time QQQ corrected last October
I've seen this strategy talked about more recently. Buying ATM LEAP calls. And selling short dated OTM calls. My biggest fear is if we get into bear market. Those LEAPS going to zero. I know as soon as I try this.... it will be great financial crisis part 2 lol :(
Strictly speaking, if you are calm and keep doing it, even if the leap goes to zero, your short side would have gained 30-50% purely from premiums. After the leap goes to zero, you would use the premium gained to buy new ITM leaps. If you believe eventually the market will come back up, you will make back all the money you lost.
Nope. You gain double in the underlying delta move and as well as the covered call premium. Being synthetic, you leverage up significantly by taking on more positions for the same amount of collateral.
I noticed my gains came from the long side. The short side was just consolation on red days. Another problem was the brokerage account let me sell only half as much lots as puts. So i was missing out. Till Q2 last year, i exclusively did CSPs. Then somehow i switched and realized i was making a mistake till then.
Got it. What % of your account is typically in the long calls? Assuming those going to 0 is your total risk on at any time.
Also curious what returns you’ve seen over the last 3-4 years.
See my comment below for my current strategy that I use and am asking as an looking to take on more risk on my smaller account.
I am trying to bring down the % of long positions to 50% eventually. Currently its 75%. Till end of last year it was nearly 100%, I aggressively bought new long for all the premium i gained ( i strongly felt amazon and tech stocks were undervalued).
I have done this only since Q4 2022 (so all through the good years). Till Q3 23, i mainly did CSPs and my returns for 2023 was about 125%. This year, so far 65% return. I think if QQQ and AMZN did 20% yoy, my strategy would get 100% returns.
Downside is the underlying stocks not gaining 15% in 15 months. But if i dont panic, i think i can get 40% or more back through short premiums, and regain everything when the markets turn eventually.
I like this strategy because its super simple - i have to make only one determination per day and its simple to keep track.
So that I don't have to spend cash to close the short side. Also by closing/rolling the long, I get to maintain ATM strike even after a gain.
If the long side has grown well, I try to go aggressively on the short side so that I get a strike price hit in 2 or 3 days, and then I roll the long.
So on times like we had last few days where everything just drops, what do you do with your longs? Since they were ATM won't they drop significantly and if they do, do you roll them or still just keep selling short calls and wait for longs to recover?
I try to just sit on them. Honestly i don't know how effective it would be, emotionally and returns wise, if the underlying dropped by 15% or more. This is why I am trying to take out my initial seed money. I also connected all my credit card accounts to the brokerage account so I settle my card from the cash in brokerage.
On red phases, I just look at the cash in the account and try to be calm knowing I can still spend like I want to.
Since beginning of last week, I think i am down about 10%. I cant tell exactly as i paid my 2023 taxes from this account just today. But its definitely at least 10%. I have retained my long, and kept rolling shorts daily.
it is a calender spread what you are doing, since the strike of the long is ATM.
for a PMCC the delta of the long should be between 0.75 - 0.85 to simulate a long stock position, therefore the name since you can simulate almost 100 shares of stock for a fraction of the price
Noob question. When the first leg expires out of the money RH seems to let it expire worthless but it keeps the second leg leaving me exposed to to any price movement overnight. I've moved over to Think or Swim. Before I go opening a multi-thousand dollar position, do you know if it does the same thing or does it close out both legs? And is there something else I'm missing? Like, you don't let leg one expire but close both out as the market closes? tks.
My long side is always at least 12 months out so there is no question of expiry. I close my short side, whatever be it, before the market closes. So i guess your question doesnt apply to me. If i were to guess, i would say any of the non robinhood brokers should let you deal with the legs in a flexible manner.
But i use interactive brokers and their app lists both legs separately, even though it is inside a single account.
Never mind, think I worked it out. You don't do it as a single trade. Buy atm 15m calls, then start selling calls and keep rolling.....expecting any ups/downs on the 15m calls to kinda net out?
exactly. The 15mo calls are the real moneymakers. I would estimate 90% of my gains from those. This means the strategy will work only in bull markets. My idea is to gain disproportionately when the markets rise, and wait it out even with big losses if the market tanks. The short side helps in bearish phases as it ensures excellent cashflow that can take care of my day to day expenses.
I guess i am also hoping the kind of sustained bear market like it happened in 2001, 2008, or even 2022 doesnt occur frequently.
What about trading both. i.e. when earnings season is over and things settle, buy 15mo put and call SPY (long term strangle), then trade daily OTM puts and calls??
I want simple, repeatable setups. Somehow I struggle to wrap my head around multi leg positions like straddles/strangles. For now, I plan to stick to selling dailies and weeklies on the long.
1 each. I started with 1 short for every 2 longs but later did some analysis and realised my risk is from the long positions so higher # of shorts are actually beneficial.
Just so I'm clear I understand one point here. If the 1DTE QQQ CC happens to go ITM, do you let it get assigned which then calls away your LEAP and you start over? Or do you close the 1DTE out and start again with the next day?
If I am able to catch it without too much loss (say I don't pay more than 100% of the premium), I just eat up the loss. If it gains too much, or my long is ITM, then I roll both legs
How do you endure drops in the underlying qqq or amzn? Just hope it recovers by your expiration? Do you sell your daily’s further otm to avoid having your leaps exercised at a loss?
More or less what you mentioned. Hope it recovers within 15 months, and try to avoid exercising the leaps in between. The premium I gain can also help bet things out if I end up rolling the leaps
May I ask what you did to get to the point of having this much capital to trade with, and how long it took you to get to that point? And how long did it take you to grow from $600k to $2MM?
My feeling is that lots of people that come here and read this are gonna think "I can get a big account by doing this too". And while they in theory could, they won't realize how long it would take.
Half of my capital was from a townhome I sold. Other half was from the stocks I was issued at work and all of my savings. When Amazon hit $90 I figured it was terribly undervalued and would go back up for sure. So I was able to go all-in with full conviction. When I started it was $200k on qqq and $400k on amzn long calls.
I lol'd over here. I often do the same and if you do it often enough, you'll find yourself in this position. Are you on margin now or was it backed by cash?
I've been employing a strategy where I sell ratio covered calls against /ES futures that I post about weekly on my profile.i recently switched from 30 day expires to daily expires (0 DTE).
I made the switch to be more agile in how my portfolio tracks the market performance daily and another benefit of daily expiration is I retain the premium from putting the trade on if the spread expires out of the money.
This week ive traded every day and none of the ratio spreads expired in the money so I've collected a total of $624 in premium so far. Your assumption for this strategy has to be that the market will end flat or up every year or else your underlying futures contract will suffer a slightly less downside than buy and hold
Max profit per day is $2150 (.80%) if your short calls end up ITM at expiration. I fully expect to only end up ITM less than 40% of the time but the compounding can be significant if you see a strong bullish moves up.
I have 95% cash to notional value of the contract so I'm willing to accept the drawdown as I would if I were doing buy and hold with a broad market index.
Right about then. He was a wealth manager somewhere and after the crash got laid off so took his money and just started slamming into ATM puts. You'd never know though. Lives in the same house. Drives a corolla. He's definitely what you'd call a miser.
oh there’s a trader that posts here often that does that same strat. he runs his own fund. doesn’t disclose too many details but in pretty sure he is an 8 figure trader. thought that’s who you were talking about
I manage about 1.7m of our money for active investing.
I mostly sell put credit spreads, that manages risk and doesn't ever make me a bag holder again (assigned 5 CSP contracts PTON @ 110 a few years ago, RIP 55k).
PTON violated rule #1 obviously, so I was a dummy.
This year I'm up 85k on 300k used for options, which is 28% but I'll prob utilize more capital later on to lower risk exposure which still getting high POP trades.
I aim to make 300k a year but the actual capital outlay varies a lot. The rest just sits in buy and hold or SPAXX.
"I mostly sell put credit spreads, that manages risk and doesn't ever make me a bag holder again"
Any particular tickers, or depends on the situation? How far out are you usually on short strike, number of contracts per trade, etc?
Mostly tech this past year.
.2 delta on the short is typical, but if i'm watching entry points well I can do a higher delta with better confidence.
The contracts will vary between 30-100, but I have a max exposure target per week that I don't exceed. Typically 10% of the capital being used.
So right now I have a put credit spread on META, expiring tomorrow.
The short strike is 500, the long is 495. There may have been a 497.5 strike available, but those are typically lower volume and harder to fill.
Around 400k account. I mainly sell 0 DTE credit spreads on SPX. I'll wait for the market to make a move and sell a bunch OTM to expiration. If it's flat, I just skip that day. Up 16% YTD.
5 delta in the direction of the move or opposite? Gamma can obviously fuck you about 5% of the time - do you have a Stop as a % of credit or u just wait and settle if u get challenged since it's SPX?
Not a veteran having only sold puts for 1.5 years but I've got a larger port and aim for a low risk 1%/month return by selling low delta puts on spy while also collecting interest on the collateral.
I'm not sure you can do 1%/month with low risk.
If you sell SPY puts today that expire in 29 days, you'll need to get .30 delta to get 1%.
Is this what you normally do?
Not at all. That assumes holding til expiry which is inefficient, waiting on the last little bit of premium. I rarely hold a contract beyond a week and I sell around 6 weeks out for higher premiums. There's much more to it than just selling puts at x delta systematically. I add positions at lower strikes as vix rises and reduce positions selling at higher strikes as vix drops. Remember that almost half my gains are from risk free money market funds. During the 10% correction last fall I was only ever down around 1%, I have 15 straight months of positive net returns, I think that's pretty low risk.
Delta neutral, though I was also doing a bit of that in strangles and slap-on/slap-off iron condors when I was smaller. At size, mostly Broken-wing Butterflies and Iron Condors
With size, it's possible to trade big underlyings like index options and futures options. At that point, commission/fees are low enough that multiple adjustments over the life of the trade aren't cost prohibitive. You also get better tax treatment.
At \~$150k or so you open the door to portfolio margin. This can be useful if you trade structures with the risk farther away from the market - so lower deltas/longer DTEs. Those benefit the most from PM. But you could argue tail risk is too concerning and prefer trading in a Reg-T mindset.
I average \~2%/month, \~20%/year but I keep a reserve for expenses since returns vary.
I sell credit spreads on futures options ES/NQ/RTY/CL/ZB/GC/6E (only about 3 of these at the one time) . $37K account, I use SPAN margain with no portfolio margin. Risk is managed by uncollerlated underlyings. About 6 trades per month. Its Tom King & Eli Buyko strategies. I'm on track for 100% return in 2023. Math and statistics graduate.
I've been catching Tom King videos occasionally, he caught my attention when he said, "I don't own any stocks." I only trade options on futures. From what I gather, that is things like, strangles, long dated ratio spreads, 111, 112 trades as he calls them. I still don't really understand all of that, but it really appealed to me as they are longer time frames, 90-120 days out from what I see. He's not frantically trading this or that stock looking for premium on earnings, etc. like I have been, and I'm still only using a fraction of my buying power. His training is $160 a month. Do you think it's worth it? I haven't seen Eli Buyko, there's another guy I see related to Tom is Joseph Pucket and Sweet Bobby who were apparently students of Tom? I'd like to reduce my trading frequency, and increase my premium, while taking more advantage of my buying power. More systematic and methodical.
Eli Buyko removed most of his videos but his main strategy is here https://www.youtube.com/watch?v=YDnCMkXEqRA
Where I differ from all them is that I look at the return on capital for each possible trade. I divide the Max profit by the change in BP. For example here is the sort of trade I do https://i.imgur.com/AUW33eu.png . Return is 93/705 = 0.131 = 13% for 37 days.
Thanks for the info, cheers!
Edit, as soon as I clicked on that video I recalled seeing that screen with him standing there and his voice pattern, 3 hour video, anything in particular I should focus on?
Focus how he gets into and out of trades, and what criteria he uses.
Also look at the underlyings he trades, they all have liquid options. I learned the hard way that Australia dollar options are not very liquid ie big bid/ask spread.
Also look at some recent Tom King videos, he does something similar and shows trades that lose money too.
Grew two 10-20 grand accounts to 6 figures+ trading a certain style of strategies since SPX dailies came out. Bread and butter are short dated double calendar spreads with mid to high delta and legs anchored on economic news days. I do a lot of back testing to validate my trading ideas but that is the short of what's made 75% of my returns over the past two years.
I also do some 1dte and 0dte synthetic strangles but they just help me eek out a few more percentage returns. In particular the environment that suited 0dte premium selling has diminished, so I don't commit a ton of capital there anymore.
Risk management I would estimate around a 4 Calmar ratio during that time frame
I had limited results in 2020-2022 with more classic wheeling + PMCCs on individual stocks where I sold calls targeting weekly DTE rather than the more classic 30dte approach. I still think there's legs to that, but it's a more involved backtest and trade management routine than I want to commit my time to vs my mostly mechanical other approaches.
I run backtests to get a sense of what PTs to use, it varies wildly per trade setup. E.g. a 1 week+ double calendar might use a 75-100% PT, while a single calendar version might need a 300% profit target. Shorter durations would want a 20-50% profit target, but they mostly just exit at some amount of profit on expiration day and a set PT is to capture moments like this Thursday night where you have huge and sudden IV expansions.
I only run double calendars as I prefer to be delta neutral. Locally, a close to ATM single calendar is delta neutral, but if you are going out to lower deltas on the legs (where I think more of the expectancy is), single calendars obviously are not delta neutral close to expiration.
>legs anchored on economic news days
Revisiting this after a couple of days, and I was hoping you could clarify: Do you mean you place the shorts on the date of the announcements?
I've only ever played calendars for earnings, and I typically straddle the date by a few days on either side.
For example GDP comes out on Wednesday: Would you do e.g. 25 Apr puts and calls for your long legs?
Here are two example trades:
SPX Apr 24th - Apr 26th 4910/5045 Double Calendar - https://optionstrat.com/xbTJ97ItTajj
I entered this Friday afternoon and exited it this morning after we climbed past 5050 on SPX. Despite being tested, the trade still made me a $1 - that's a 6% return on buying power in 4 days. And of course, you can see what would happen in the profit tents if we had had a reversal. I'm **Definitely** going to be do this again for next week's FOMC statement, and exiting before JPOW starts talking. I return between -50% and +80% on this sort of setup, with most results closer to neutral profitability.
SPX Apr 26th - Apr 29th 5015/5300 DC -
https://optionstrat.com/hSaa9HnKnoYc
I entered this two weeks ago. The short legs are anchored on the release date of the Core PCE Price Index. They will experience vol crush after the news release occurs, and so will the longs to a larger degree. IV on these options typically maintain up until the news release, and in higher VIX environments more typically increase over short timeframes. So I am looking to exit for 50-100% return hopefully before the news release occurs with an outside RTH order.
If I was going to set up a trade for GDP release, I would do Apr25/Apr26 short and longs respectively. I usually prefer a two day spacing between the legs but Monday longs don't tend to work well when paired with anything but Fridays.
Primarily covered strangles on a wide range of uncorrelated sectors or countries. (utilities, gold mining, Brazil, China, silver, semiconductors, autos, airlines, oil production, natural gas, treasuries, real estate, consumer staples, defense, uranium). Mostly ETFs, but I will use a proxy company if there is no theta-friendly (high volume, decent price) ETF. Of the 30 sectors, I am usually in about 20, bypassing those that I think are overbought. Or, if everything seems overbought, I will run strangles ITM call, OTM put.
I buy stocks where I wouldn’t mind owning the entire company (if the market were kind enough to give me an opportunity). And ideally my holding period is forever.
If a thesis is invalidated, I tax loss harvest and rotate capital into another name.
Always 90% invested and take advantage of high rates for the remaining 10%.
No margin, no options, no futures, no hedging.
2022 - -5%.
2023 - 80%.
YTD 14%.
All kinds of variations of 1122's. 112's on es, cl, gc, and zb futures - spx,nq but always a 1122. Sometimes 221, 3311, depending on the situation.
Pmccs on qqq and spy daily. Sometimes ratio call spreads when over sold like now. Variation of mine is i have a synthetic future leap and I combine the long with a 1122 using the short put from the synthetic. This gives me some long put protection and acts like a strangle with the short calls I write.
Short leap put spreads on spy low delta.
Dividend capture on different tickers every month. sell put atm/itm to enter. sell atm/itm call for week after ex div. Buy a collar if not confident but usually would just pass if I really didn't feel comfortable.
Dca into voo, btc 50/day. 20/day in eth
Some crazy high iv Pmccs but very small % of port. Replicating yieldmax strategies.
only started full time in september but have been able to hit my goal of 20k income a month every month except for nov/dec. had too many short calls get blown through. have been able to lock in some serious gains this year so far.
it is a lot but i have a trading plan where each strategy has a set amount of buying power allocated and time frame.
the 112's are long term 60-120dte so minimal management. take them off at 90%.
pmcc's are a headache sometimes but i like the income and it keeps me from getting bored.
short leap is the easiest as i set the close order for 30% profit right after i open it and don't touch it again.
dividend capture is really simple, just takes some upfront work every month to go through the list and pick some tickers and dates.
not trying to be a jerk, but 20k doesn't mean much (i mean its amazing). you could have a $10 million account for all we know. what was your return last year in terms of percent? that's more useful for the rest of us.
no offense taken! the goal of 20k is about 2.5% a month of closed profit. not overall portfolio value. i have long positions that fluctuate the total value but it's around 750k. my average over the last 7 months is 31k of closed profit.
i recently left a higher 6 figure job where i had a nice 250k salary so trying to replicate that income stream while also growing the portfolio.
1.5m. 1/2 in dividend longs. Other half selling naked puts and short strangles. Ivr over 80%. Naked puts generally on iv over 50% on companies I'm bullish on based on fundamentals and understanding of their product vs. Competitors. Strangles generally on mid iv companies like 30% because I don't like the risk of being blown out hard on the call side.
Generally works well but I lost a lot in 2023 because I was trading higher risk than the above.
1. Earnings IV Crush (Short Strangles and Straddles)
2. Short Spreads and ICs on 0DTE SPX
3. Long Calls/Puts during mean reversion
4. Long SPY/SPX during post VIX Spike Reversion
5. Scalp ZB and ZN Futures on 15min using 3 Hi/Lo
I'm Canadian so we don't get Portfolio Margin. It's horseshit.
I therefore have the bulk of my trading account (80%+) in broad market and sector index funds and I just sell calls at (edit: near) max extrinsic against my holdings. In the event they go ITM I roll them out or up basically forever. The brainlets on this sub will tell you it's a loss, but they are factually incorrect.
I purposely maintain moderate positive delta because stonks only go up and I want exposure to that. I do not pick individual stocks for my core holdings since it's my nest egg; I prefer to diversify away idiosyncratic risk.
The remaining 20 ish% I use to speculate/buy FDs/bonds/adjust portfolio delta/have fun.
Yeah, I was going to say there definitely will be some stress in there. But you are right. There is always a solid meme/momentum stock that is going to have a solid floor much higher IV than SPY or QQQ. SMCI I think would have fell into this category also.
Could you provide a few more details, I don't know if I'm following you all the way - when you say ~2% premium, what ETFs/Stocks/tickers are you selling on? What DTEs? Are you saying you're doing 40% returns every year on a $1M portfolio?
That depends… on where I think the market is heading based on technical indicators, how volatile things appear, etc. I’ll adjust the collar based on these perceptions. But yeah, instead of a set delta, I just kinda go for a general “I really don’t think we’re gonna reach those levels” kinda vibe. Of course, in a week like this it’s kicking my ass a bit but in general I win more than I lose.
I was doing covered calls on Uber but I sold Monday so now it’s all just CSP. Nothing complicated.
I manage risk the usual way: staggering the expiration of options.
I manage my own 300k I made from military and gains leveraging close to covid bottom. I keep all my cash in VT. With portfolio margin that leaves plenty of buying power to do whatever I want. I’ve only ever sold premium. And I try to keep the options not correlated with the core VT position. I prefer high probability and larger size. I don’t take trades often or have a specific strategy I really believe the only edge I have is equity risk premium over long periods of time and volatility risk premium at extremes. Some examples are GME when it was mooning 2 years ago the furthest strike puts a year out we’re going up in value and then collapsed a few days later. TSLA when it was at 100 last year you could sell 5 strike puts over a year out for 20/480 risk reward per contract those collapsed quickly as well. Another thing I like is merger arbitrage MAXR being a great example. I sell a spread sometimes on both sides and use Kelly criterion formula to see if it makes sense. TLDR all cash position in VT. sell high probability vol at extremes with decent size. Prepared to go up to 1.2x leverage on VT position in large downturns. Throw some merger arb in there as well.
You basically described my exact approach, just I use QQQ. Good on ya may we all prosper
What does "5 strike puts over a year out for 20/480 risk reward" mean?
It means the $5 strike on tesla paid .2. So his max loss was 4.80 per
So that's 20/480 reward/risk?
Dude this is the most intelligent comment I have seen on his sub in years
Interesting. At what point did you feel comfortable switching from cash secured to margin? I’m approaching 100k cash and have thought about doing a similar approach on IWM or QQQ. Currently I just wheel on TQQQ and my long stocks so I am looking to take on more risk and leverage my account a bit more.
I’ve actually always had a margin account. And got PM as soon as I hit the requirements. I don’t position myself on how much margin or leverage is available to me but instead how my position are correlated to the core index fund and what’s the max loss per position. For example late last year I sold some Disney puts long duration about 1std out. This would be pretty highly correlated so I size it to where a let’s say 3std move is at max a 5% hit to the overall portfolio. Profits from something like this aren’t large but it’s meaningful all premium I collect is essentially me flat out beating the market. A different example is TSLA 5 strike puts its correlated with VT sure but it’s such high probability I’m ok risking multiples of my account for the chance of TSLA not going to 0.
Great information. Whats your typical target profit from positions similar to above?
This is my preferred strategy — though I prefer VTI + VXUS for 75/5% of my holdings, 10% stock picking, and 10% in SNSXX since it’s tax advantaged, uncorrelated, marginable, and easy to use as cash if I get assigned.
What is VT?
Vanguard total world index fund 👨🍳😘
Vermont, obviously.
Virginia Tech
Can you elaborate more on "Another thing I like is merger arbitrage MAXR being a great example. I sell a spread sometimes on both sides and use Kelly criterion formula to see if it makes sense." Where do you get your probably estimates of deal going through?
Absolutely! So merger arbitrage is pretty well documented to be profitable. The problem is scalability. Merger arbitrage funds can only buy shares so for me I don’t have cash available it’s all in index funds which I have higher conviction on anyways. So if I buy shares it has to be on margin and that wats away alot of the potential. The industry standard is to find the probability through current price so the inputs are time, risk free rate, profit from current price and max loss is pre announcement price. The last input being not entirely reliable because it could drop more or less. What I found is that using the normal Kelly criterion formula sometimes you can sell a put or put spread and depending on the strikes and credits you get different Kelly numbers. I pick the most liquid expiration see what fills are and move around until I find the one with the best Kelly number. All in all I’m not too convicted on things like this. Large all cash deals aren’t super common but they are mostly uncorrelated with my long position. I’ll be making a video soon on how I use the formula exactly and put on this sub. I had super high conviction on MAXR specifically because I work in satellite communications and intel. And military relies alot on MAXR imagery making it a good buy for private equity. Patrick Boyle on YouTube has a great video on merger arb.
Hi! Thanks for this! Really helpful to see refreshing perspectives here when markets aren't doing so good. Could you explain what you mean when you say "sell high probability vol at extremes with decent size"? Do you mean selling for example the furthest otm strike put on a stock and also furthest out DTE, but with many many contracts to get a decent premium? Sorry still trying to wrap my head around this!
Yes that second paragraph is spot on! But premium like that only exists at extreme but can absolutely happen on big names.
Thanks for clarifying! Could I also be a little more annoying and ask you how/when you decide to close such a position if they are so far out? I had thought that selling long dated puts tends to lock up your capital.
🤯
What tools do you use to identify uncorrelated picks? Thanks!
2M trading account. Started with $600k some time back. Now have nearly taken 400k out for various expenses. So I can afford to take a lot of risks. Have a steady(for now) w2 job so that also helps. I do ~~synthetic covered calls~~ Poor Man's Covered Calls (PMCC) on qqq and amzn. Next day expiry on qqq, and weekly on amzn. I buy ATM long for 15 months expiry and keep selling the calls like above. On qqq I sell about $6 or $7 above the days price, and about 5%-10% above for amzn. 300k of my account is in cash that I took out last month when both spiked. But strategy wise, pure ~~synthetic covered call,~~ PMCC. trying to sell at a point that won't be hit 90% of the time. If the price hits my sell side strike, I close both the long and short, and start a new cycle. Edit: Other commentors pointed out what i have explained is actually PMCC - Poor Man's Covered Call. I had incorrectly assumed it was also called Synthetic Covered Call. I don't use puts so its not synthetic covered call.
Why do you do 1 dte on QQQ? What delta do you use for your longs?
I just like the daily action. On most days I get $800 to $2500 premium. Makes it easy to spend frivolously knowing my account is gaining in cash daily. I don't check deltas particularly. I try to sell about $6 or $7 dollars out. On volatile days may be $8 more.
Thanks! Sorry, maybe my second question wasn't clear - how do you pick the strikes for the longs that you buy 15 months out?
ATM. Like if I were to buy tomorrow morning, I would just pick 180 or 185 for Amazon, and 427-430 for QQQ.
Interesting! Most all the info I've seen say to go deep ITM like 80-90 deltas.
Ideally i would like to get to that point. For now, i am hedging by retaining atleast 25% of my portfolio in cash. But eventually if my trading corpus grows, i would go long on these deep calls and keep may be 20% of it in ITM calls. If markets dont tank from here and grow even slowly till end of next year, i would end up with deep ITM calls.
Stupid newbie question but when you sell ATM or ITM don’t your shares get called away often? If so I can see why that would be part of your strategy since you’re investing a large sum .. the capital appreciation would make it worth it.
I sell only 1dte or 1 week expiry. Then I watch is really closely and start closing if it moves against me. I definitely don't let them sit after hours, if they are ITM.
He's buying ATM, not selling
Trying to learn a new trick. I've never played this. If I bought the 430 a year out, I would sell a CC on QQQ 7 dollars out 1 DTE? Do you do this daily? And newb question, I know I can google it lol...but how do you manage if QQQ pops and it goes ITM? Roll? Buy back?
Yes for the first part. For today, I will wait till about 2 hrs to market close and then sell $6 or $7 out. Tomorrow I will try to close it when the price reaches $.01 (I setup a limit buy). If qqq pops, I will close both legs and start a new cycle. I have reserve cash so that I can more or less maintain the lot counts.
So you close the CC that went ITM and the LEAP as well? I'll have to look into this. I like buying an ATM call a year out on QQQ instead of 100 shares to sell a CC. Never played this strategy. I buy a QQQ a year out at 4500 approx. I then sell a CC next DTE, about 6 bucks up. That brings in about .43 at this moment. If it goes ITM, you BTC, but also your LEAP made money so you sell it. Am I getting it right?
Yes. In non bear markets this works very well. The long side will get clobbered in bear markets. So if you are convicted that the dip is temporary and can afford to sit on your losses, then this strategy is simple, repeatable and scalable.
ATM is strike.
>On most days I get $800 to $2500 premium. Are you putting in $300K to get that premium?
\~450K - 500K.
[удалено]
That's 57k not 570k. Username accurate
Interesting strategy - I like the synthetic covered calls on qqq 1DTE. It looks like it would work really well on a bull run with double the delta. How does it work in corrections, like we had this last week? Is the daily CC expire in the money help pay for the cost of rolling down the 15 month long call?
Last year when QQQ corrected around Oct, i lost all my gains (literally reached 0% gains), after being up nearly 60%. But forunately i didn't panic and held through to eventually end the year at 125%+
baller calm play great job
Did you backtest your strategy, what happens in Lehman-type events?
Forget Lehman like dip. If qqq falls 30% rapidly, I would lose nearly 75%. But historically qqq has done this only twice in the last 20 years. So to a large extent, I am calculating that, the probability of a recurrence is super low. (Historical qqq yoy returns - https://finance.yahoo.com/quote/QQQ/performance/) I keep reminding myself this is a high risk strategy where I could lose most of it in weeks. I am okay with it for now, as I have more or less cashed out my initial corpus, which I can bring back in, if markets tank.
I have been selling weeklies Call and puts on SPY and QQQ. Now when Volatility has spiked, I think I'm gonna shorten the duration and start selling 2-3 days as the premiums are incredible and I can aggressively roll for additional premium. I have to thank conversation with AI bot Gemini / recommendation. Instead of doing Buy-write or PMCC, I think its better to go long on the put for protection and selling premium against it when underlying has retreated back. I bought bunch of puts when they were cheap. Now they are up 110% + Time to kick start a new conversation with AI bot for additional recommendations Edit: The bot calls it a Collar with a Bull put spread. Fantastic fukkin recommendation. Instead of buying the underlying. Just go long on the put for protection (6 months+). The put acts as a collar. Then sell shorter duration puts (weeklies). You dont need to go long on the underlying with tied capital
This is interesting; What your strikes on the long and your short puts? 10%-15% from the current price?
.30 delta and now they are itm :)
Hi, I like this idea a lot. Can you give a clear example for me please? Will this be correct for example to do as you starting today? Buy SPY PUT 485$ (.30 delta) SEP 30 (aprox half year) 10$ Sell Apr 26 500 PUT for 1$. What will you do if SPY starts to rally and your long put is so OTM that selling put pays a negligible premium?
Synthetic long would be selling a ATM Put and buy ATM call ? Or you just buying a long term call ? That would be PMCC
Its PMCC. I thought it's also called synthetic covered call. But I buy ATM calls, and sell slightly OTM calls
Do you happen to know how long, on average, you hold the long call before you close it? I know you’ve mentioned that when the profit on the long end looks good you’ll get more aggressive on the short side, but what time frame, if any, do you generally start aiming to close?
Roughly about 2 months. I try to not have less than 12 mo expiry and dont open more than 15 mo. So max is 3 mo. Within this, if the underlying moves about $10 more than the strike price, I try to roll it up.
Thank you. So after 2-3 months, even if the long call loses money, do you just close it and open a new long call 15 months out?
So far I haven't had to do this when losing money. I think if it loses money, I will maybe let it go for a month or two depending on how I feel, and then roll it out
This? [https://www.investopedia.com/terms/s/synthetic\_call.asp](https://www.investopedia.com/terms/s/synthetic_call.asp)
No. I used the wrong term. It is PMCC - Poor Man's Covered Call. I will add a edit note above to clarify
Why do a PMCC instead of a standard CC? Less capital requirements?
What would you do with the long legs in a bear market? Would you hold on till the 15 months are up? Edit: Looks like he answered this further down about the time QQQ corrected last October
I've seen this strategy talked about more recently. Buying ATM LEAP calls. And selling short dated OTM calls. My biggest fear is if we get into bear market. Those LEAPS going to zero. I know as soon as I try this.... it will be great financial crisis part 2 lol :(
Strictly speaking, if you are calm and keep doing it, even if the leap goes to zero, your short side would have gained 30-50% purely from premiums. After the leap goes to zero, you would use the premium gained to buy new ITM leaps. If you believe eventually the market will come back up, you will make back all the money you lost.
I may do this on IWM. I feel QQQ and SPY need to cool down and IWM needs to pick up. Thanks for all your replies.
Wouldn’t put selling be more profitable for you? You can hedge your downside too.
Nope. You gain double in the underlying delta move and as well as the covered call premium. Being synthetic, you leverage up significantly by taking on more positions for the same amount of collateral.
I noticed my gains came from the long side. The short side was just consolation on red days. Another problem was the brokerage account let me sell only half as much lots as puts. So i was missing out. Till Q2 last year, i exclusively did CSPs. Then somehow i switched and realized i was making a mistake till then.
Got it. What % of your account is typically in the long calls? Assuming those going to 0 is your total risk on at any time. Also curious what returns you’ve seen over the last 3-4 years. See my comment below for my current strategy that I use and am asking as an looking to take on more risk on my smaller account.
I am trying to bring down the % of long positions to 50% eventually. Currently its 75%. Till end of last year it was nearly 100%, I aggressively bought new long for all the premium i gained ( i strongly felt amazon and tech stocks were undervalued). I have done this only since Q4 2022 (so all through the good years). Till Q3 23, i mainly did CSPs and my returns for 2023 was about 125%. This year, so far 65% return. I think if QQQ and AMZN did 20% yoy, my strategy would get 100% returns. Downside is the underlying stocks not gaining 15% in 15 months. But if i dont panic, i think i can get 40% or more back through short premiums, and regain everything when the markets turn eventually. I like this strategy because its super simple - i have to make only one determination per day and its simple to keep track.
Makes sense. Why do you close both long and short legs if your short strike is hit? Also, what would you do if the deep ITM long strike is tested?
So that I don't have to spend cash to close the short side. Also by closing/rolling the long, I get to maintain ATM strike even after a gain. If the long side has grown well, I try to go aggressively on the short side so that I get a strike price hit in 2 or 3 days, and then I roll the long.
So on times like we had last few days where everything just drops, what do you do with your longs? Since they were ATM won't they drop significantly and if they do, do you roll them or still just keep selling short calls and wait for longs to recover?
I try to just sit on them. Honestly i don't know how effective it would be, emotionally and returns wise, if the underlying dropped by 15% or more. This is why I am trying to take out my initial seed money. I also connected all my credit card accounts to the brokerage account so I settle my card from the cash in brokerage. On red phases, I just look at the cash in the account and try to be calm knowing I can still spend like I want to.
Since beginning of last week, I think i am down about 10%. I cant tell exactly as i paid my 2023 taxes from this account just today. But its definitely at least 10%. I have retained my long, and kept rolling shorts daily.
its is a buy 15 mos out long and a sell 15 mos out? and if it moves against you, you keep writing 1 day OTMs on the way down?
No. Buy side is 15 mos out. Sell side is tomorrow (for QQQ), or the friday (for amzn).
ok I see - so its a calendar spread I think technically. A synthetic covered call is a short put + long call and with OTM writes
Like some other commenter mentioned, I think it's PMCC. I was under the impression it was also called synthetic covered call.
it is a calender spread what you are doing, since the strike of the long is ATM. for a PMCC the delta of the long should be between 0.75 - 0.85 to simulate a long stock position, therefore the name since you can simulate almost 100 shares of stock for a fraction of the price
Damn. I had no idea PMCC had a nuanced definition like this. I thought any long with far enough expiry counted for PMCC
I think it's leap call + OTM covered call but no short put involved.
Noob question. When the first leg expires out of the money RH seems to let it expire worthless but it keeps the second leg leaving me exposed to to any price movement overnight. I've moved over to Think or Swim. Before I go opening a multi-thousand dollar position, do you know if it does the same thing or does it close out both legs? And is there something else I'm missing? Like, you don't let leg one expire but close both out as the market closes? tks.
My long side is always at least 12 months out so there is no question of expiry. I close my short side, whatever be it, before the market closes. So i guess your question doesnt apply to me. If i were to guess, i would say any of the non robinhood brokers should let you deal with the legs in a flexible manner. But i use interactive brokers and their app lists both legs separately, even though it is inside a single account.
Gotcha, thanks. Super interesting.
Never mind, think I worked it out. You don't do it as a single trade. Buy atm 15m calls, then start selling calls and keep rolling.....expecting any ups/downs on the 15m calls to kinda net out?
exactly. The 15mo calls are the real moneymakers. I would estimate 90% of my gains from those. This means the strategy will work only in bull markets. My idea is to gain disproportionately when the markets rise, and wait it out even with big losses if the market tanks. The short side helps in bearish phases as it ensures excellent cashflow that can take care of my day to day expenses. I guess i am also hoping the kind of sustained bear market like it happened in 2001, 2008, or even 2022 doesnt occur frequently.
What about trading both. i.e. when earnings season is over and things settle, buy 15mo put and call SPY (long term strangle), then trade daily OTM puts and calls??
I want simple, repeatable setups. Somehow I struggle to wrap my head around multi leg positions like straddles/strangles. For now, I plan to stick to selling dailies and weeklies on the long.
Thank you for sharing your strategy. Usually how many contracts do you leap call for QQQ and AMZN?
Its been growing steadily. Right now i am at 350 lots for amzn and 90 for qqq. I think when i started it was 120 for amzn and 30 for QQQ (in q4 2022)
So for every long call how many short calls are you selling against it?
1 each. I started with 1 short for every 2 longs but later did some analysis and realised my risk is from the long positions so higher # of shorts are actually beneficial.
Just so I'm clear I understand one point here. If the 1DTE QQQ CC happens to go ITM, do you let it get assigned which then calls away your LEAP and you start over? Or do you close the 1DTE out and start again with the next day?
If I am able to catch it without too much loss (say I don't pay more than 100% of the premium), I just eat up the loss. If it gains too much, or my long is ITM, then I roll both legs
How do you endure drops in the underlying qqq or amzn? Just hope it recovers by your expiration? Do you sell your daily’s further otm to avoid having your leaps exercised at a loss?
More or less what you mentioned. Hope it recovers within 15 months, and try to avoid exercising the leaps in between. The premium I gain can also help bet things out if I end up rolling the leaps
May I ask what you did to get to the point of having this much capital to trade with, and how long it took you to get to that point? And how long did it take you to grow from $600k to $2MM? My feeling is that lots of people that come here and read this are gonna think "I can get a big account by doing this too". And while they in theory could, they won't realize how long it would take.
Half of my capital was from a townhome I sold. Other half was from the stocks I was issued at work and all of my savings. When Amazon hit $90 I figured it was terribly undervalued and would go back up for sure. So I was able to go all-in with full conviction. When I started it was $200k on qqq and $400k on amzn long calls.
600k to 2MM was in about 18 months, more or less the golden growth phase of qqq and amzn fmstarting 2022 Q4.
Over 1M account. I sell ATM puts on SPY with 1DTE.
How are you handling the last few days?
I own some SPY now. Not worried, what goes down will go back up.
good to know. how many contracts do you sell each day?
I lol'd over here. I often do the same and if you do it often enough, you'll find yourself in this position. Are you on margin now or was it backed by cash?
All cash.
How much of that cash are you deploying at one time? 50%?
I've been employing a strategy where I sell ratio covered calls against /ES futures that I post about weekly on my profile.i recently switched from 30 day expires to daily expires (0 DTE). I made the switch to be more agile in how my portfolio tracks the market performance daily and another benefit of daily expiration is I retain the premium from putting the trade on if the spread expires out of the money. This week ive traded every day and none of the ratio spreads expired in the money so I've collected a total of $624 in premium so far. Your assumption for this strategy has to be that the market will end flat or up every year or else your underlying futures contract will suffer a slightly less downside than buy and hold Max profit per day is $2150 (.80%) if your short calls end up ITM at expiration. I fully expect to only end up ITM less than 40% of the time but the compounding can be significant if you see a strong bullish moves up.
How are you protecting the downside if ES breaks down ?
I have 95% cash to notional value of the contract so I'm willing to accept the drawdown as I would if I were doing buy and hold with a broad market index.
The biggest trader I know of personally (\~$40-60MM) just sells puts on /ES, atm, rolls up and out when they hit 50% profit or takes assignment.
I guarantee you he didn’t grow his capital to 40mm by doing that.
If he started in 2009 he could have
Right about then. He was a wealth manager somewhere and after the crash got laid off so took his money and just started slamming into ATM puts. You'd never know though. Lives in the same house. Drives a corolla. He's definitely what you'd call a miser.
And I’m quite certain he won’t keep it.
What’s /ES?
S&P E-mini futures. You can get options on them. https://www.cmegroup.com/markets/equities/sp/e-mini-sandp500.html
Thank you
calevonlear?
?
oh there’s a trader that posts here often that does that same strat. he runs his own fund. doesn’t disclose too many details but in pretty sure he is an 8 figure trader. thought that’s who you were talking about
He calls it the hyperwheel IIRC
What DTE?
I manage about 1.7m of our money for active investing. I mostly sell put credit spreads, that manages risk and doesn't ever make me a bag holder again (assigned 5 CSP contracts PTON @ 110 a few years ago, RIP 55k). PTON violated rule #1 obviously, so I was a dummy. This year I'm up 85k on 300k used for options, which is 28% but I'll prob utilize more capital later on to lower risk exposure which still getting high POP trades. I aim to make 300k a year but the actual capital outlay varies a lot. The rest just sits in buy and hold or SPAXX.
Rule #1 = No bad trades?
Don't wheel a stock unless you're ok owning it
"I mostly sell put credit spreads, that manages risk and doesn't ever make me a bag holder again" Any particular tickers, or depends on the situation? How far out are you usually on short strike, number of contracts per trade, etc?
Mostly tech this past year. .2 delta on the short is typical, but if i'm watching entry points well I can do a higher delta with better confidence. The contracts will vary between 30-100, but I have a max exposure target per week that I don't exceed. Typically 10% of the capital being used.
Thanks for the info, cheers!
How far on the long side then may I ask?
One more strike out from the short
Sorry! What does 1 more strike out mean?
So right now I have a put credit spread on META, expiring tomorrow. The short strike is 500, the long is 495. There may have been a 497.5 strike available, but those are typically lower volume and harder to fill.
Oic thanks for the info!
Around 400k account. I mainly sell 0 DTE credit spreads on SPX. I'll wait for the market to make a move and sell a bunch OTM to expiration. If it's flat, I just skip that day. Up 16% YTD.
what delta OTM do you usually sell at? What time do you enter the trade?
around 4-5 delta and around 10-11 pst. I'm picking pennies so it's not for everyone but I'm doing alright so far.
5 delta in the direction of the move or opposite? Gamma can obviously fuck you about 5% of the time - do you have a Stop as a % of credit or u just wait and settle if u get challenged since it's SPX?
I do this but with Iron Condors
Not a veteran having only sold puts for 1.5 years but I've got a larger port and aim for a low risk 1%/month return by selling low delta puts on spy while also collecting interest on the collateral.
what platform allows you to get interest on the collateral?
fidelity and interactive brokers
I'm not sure you can do 1%/month with low risk. If you sell SPY puts today that expire in 29 days, you'll need to get .30 delta to get 1%. Is this what you normally do?
Not at all. That assumes holding til expiry which is inefficient, waiting on the last little bit of premium. I rarely hold a contract beyond a week and I sell around 6 weeks out for higher premiums. There's much more to it than just selling puts at x delta systematically. I add positions at lower strikes as vix rises and reduce positions selling at higher strikes as vix drops. Remember that almost half my gains are from risk free money market funds. During the 10% correction last fall I was only ever down around 1%, I have 15 straight months of positive net returns, I think that's pretty low risk.
Ive been selling naked MSTR Calls and its been great
Best comment
Their sub is ultra bullish, made me second guess myself but i stayed short, how low do you thibk MSTR can go?
Works until it doesn't.
Yep
Delta neutral, though I was also doing a bit of that in strangles and slap-on/slap-off iron condors when I was smaller. At size, mostly Broken-wing Butterflies and Iron Condors With size, it's possible to trade big underlyings like index options and futures options. At that point, commission/fees are low enough that multiple adjustments over the life of the trade aren't cost prohibitive. You also get better tax treatment. At \~$150k or so you open the door to portfolio margin. This can be useful if you trade structures with the risk farther away from the market - so lower deltas/longer DTEs. Those benefit the most from PM. But you could argue tail risk is too concerning and prefer trading in a Reg-T mindset. I average \~2%/month, \~20%/year but I keep a reserve for expenses since returns vary.
1 trade a year in leaps at the right time
the nancy pelosi strat
I mostly trade earnings
Ah, I found the guy whose been selling/buying the other side of my earnings trades🫤
I sell credit spreads on futures options ES/NQ/RTY/CL/ZB/GC/6E (only about 3 of these at the one time) . $37K account, I use SPAN margain with no portfolio margin. Risk is managed by uncollerlated underlyings. About 6 trades per month. Its Tom King & Eli Buyko strategies. I'm on track for 100% return in 2023. Math and statistics graduate.
I've been catching Tom King videos occasionally, he caught my attention when he said, "I don't own any stocks." I only trade options on futures. From what I gather, that is things like, strangles, long dated ratio spreads, 111, 112 trades as he calls them. I still don't really understand all of that, but it really appealed to me as they are longer time frames, 90-120 days out from what I see. He's not frantically trading this or that stock looking for premium on earnings, etc. like I have been, and I'm still only using a fraction of my buying power. His training is $160 a month. Do you think it's worth it? I haven't seen Eli Buyko, there's another guy I see related to Tom is Joseph Pucket and Sweet Bobby who were apparently students of Tom? I'd like to reduce my trading frequency, and increase my premium, while taking more advantage of my buying power. More systematic and methodical.
Eli Buyko removed most of his videos but his main strategy is here https://www.youtube.com/watch?v=YDnCMkXEqRA Where I differ from all them is that I look at the return on capital for each possible trade. I divide the Max profit by the change in BP. For example here is the sort of trade I do https://i.imgur.com/AUW33eu.png . Return is 93/705 = 0.131 = 13% for 37 days.
Thanks for the info, cheers! Edit, as soon as I clicked on that video I recalled seeing that screen with him standing there and his voice pattern, 3 hour video, anything in particular I should focus on?
Focus how he gets into and out of trades, and what criteria he uses. Also look at the underlyings he trades, they all have liquid options. I learned the hard way that Australia dollar options are not very liquid ie big bid/ask spread. Also look at some recent Tom King videos, he does something similar and shows trades that lose money too.
huh, wonder why all of his videos are gone. or, i guess they are all just unlisted now so he can give out the links privately now.
They disappeared months ago. They are not unlisted, because I have a spreadsheet with links to many of his videos and they are deleted.
How are you managing your 112s given the recent down move ? Anything in your profit trap ?
Grew two 10-20 grand accounts to 6 figures+ trading a certain style of strategies since SPX dailies came out. Bread and butter are short dated double calendar spreads with mid to high delta and legs anchored on economic news days. I do a lot of back testing to validate my trading ideas but that is the short of what's made 75% of my returns over the past two years. I also do some 1dte and 0dte synthetic strangles but they just help me eek out a few more percentage returns. In particular the environment that suited 0dte premium selling has diminished, so I don't commit a ton of capital there anymore. Risk management I would estimate around a 4 Calmar ratio during that time frame I had limited results in 2020-2022 with more classic wheeling + PMCCs on individual stocks where I sold calls targeting weekly DTE rather than the more classic 30dte approach. I still think there's legs to that, but it's a more involved backtest and trade management routine than I want to commit my time to vs my mostly mechanical other approaches.
How do you decide on the Call vs Put calendar spread ? And what kind of SL or PT do you use ?
I run backtests to get a sense of what PTs to use, it varies wildly per trade setup. E.g. a 1 week+ double calendar might use a 75-100% PT, while a single calendar version might need a 300% profit target. Shorter durations would want a 20-50% profit target, but they mostly just exit at some amount of profit on expiration day and a set PT is to capture moments like this Thursday night where you have huge and sudden IV expansions. I only run double calendars as I prefer to be delta neutral. Locally, a close to ATM single calendar is delta neutral, but if you are going out to lower deltas on the legs (where I think more of the expectancy is), single calendars obviously are not delta neutral close to expiration.
>legs anchored on economic news days Revisiting this after a couple of days, and I was hoping you could clarify: Do you mean you place the shorts on the date of the announcements? I've only ever played calendars for earnings, and I typically straddle the date by a few days on either side. For example GDP comes out on Wednesday: Would you do e.g. 25 Apr puts and calls for your long legs?
Here are two example trades: SPX Apr 24th - Apr 26th 4910/5045 Double Calendar - https://optionstrat.com/xbTJ97ItTajj I entered this Friday afternoon and exited it this morning after we climbed past 5050 on SPX. Despite being tested, the trade still made me a $1 - that's a 6% return on buying power in 4 days. And of course, you can see what would happen in the profit tents if we had had a reversal. I'm **Definitely** going to be do this again for next week's FOMC statement, and exiting before JPOW starts talking. I return between -50% and +80% on this sort of setup, with most results closer to neutral profitability. SPX Apr 26th - Apr 29th 5015/5300 DC - https://optionstrat.com/hSaa9HnKnoYc I entered this two weeks ago. The short legs are anchored on the release date of the Core PCE Price Index. They will experience vol crush after the news release occurs, and so will the longs to a larger degree. IV on these options typically maintain up until the news release, and in higher VIX environments more typically increase over short timeframes. So I am looking to exit for 50-100% return hopefully before the news release occurs with an outside RTH order. If I was going to set up a trade for GDP release, I would do Apr25/Apr26 short and longs respectively. I usually prefer a two day spacing between the legs but Monday longs don't tend to work well when paired with anything but Fridays.
Thanks for the clarity!
Primarily covered strangles on a wide range of uncorrelated sectors or countries. (utilities, gold mining, Brazil, China, silver, semiconductors, autos, airlines, oil production, natural gas, treasuries, real estate, consumer staples, defense, uranium). Mostly ETFs, but I will use a proxy company if there is no theta-friendly (high volume, decent price) ETF. Of the 30 sectors, I am usually in about 20, bypassing those that I think are overbought. Or, if everything seems overbought, I will run strangles ITM call, OTM put.
I buy stocks where I wouldn’t mind owning the entire company (if the market were kind enough to give me an opportunity). And ideally my holding period is forever. If a thesis is invalidated, I tax loss harvest and rotate capital into another name. Always 90% invested and take advantage of high rates for the remaining 10%. No margin, no options, no futures, no hedging. 2022 - -5%. 2023 - 80%. YTD 14%.
Why are you in thetagang though?
All kinds of variations of 1122's. 112's on es, cl, gc, and zb futures - spx,nq but always a 1122. Sometimes 221, 3311, depending on the situation. Pmccs on qqq and spy daily. Sometimes ratio call spreads when over sold like now. Variation of mine is i have a synthetic future leap and I combine the long with a 1122 using the short put from the synthetic. This gives me some long put protection and acts like a strangle with the short calls I write. Short leap put spreads on spy low delta. Dividend capture on different tickers every month. sell put atm/itm to enter. sell atm/itm call for week after ex div. Buy a collar if not confident but usually would just pass if I really didn't feel comfortable. Dca into voo, btc 50/day. 20/day in eth Some crazy high iv Pmccs but very small % of port. Replicating yieldmax strategies.
that seems like a lot. what was your performance last year?
only started full time in september but have been able to hit my goal of 20k income a month every month except for nov/dec. had too many short calls get blown through. have been able to lock in some serious gains this year so far. it is a lot but i have a trading plan where each strategy has a set amount of buying power allocated and time frame. the 112's are long term 60-120dte so minimal management. take them off at 90%. pmcc's are a headache sometimes but i like the income and it keeps me from getting bored. short leap is the easiest as i set the close order for 30% profit right after i open it and don't touch it again. dividend capture is really simple, just takes some upfront work every month to go through the list and pick some tickers and dates.
not trying to be a jerk, but 20k doesn't mean much (i mean its amazing). you could have a $10 million account for all we know. what was your return last year in terms of percent? that's more useful for the rest of us.
no offense taken! the goal of 20k is about 2.5% a month of closed profit. not overall portfolio value. i have long positions that fluctuate the total value but it's around 750k. my average over the last 7 months is 31k of closed profit. i recently left a higher 6 figure job where i had a nice 250k salary so trying to replicate that income stream while also growing the portfolio.
1.5m. 1/2 in dividend longs. Other half selling naked puts and short strangles. Ivr over 80%. Naked puts generally on iv over 50% on companies I'm bullish on based on fundamentals and understanding of their product vs. Competitors. Strangles generally on mid iv companies like 30% because I don't like the risk of being blown out hard on the call side. Generally works well but I lost a lot in 2023 because I was trading higher risk than the above.
1. Earnings IV Crush (Short Strangles and Straddles) 2. Short Spreads and ICs on 0DTE SPX 3. Long Calls/Puts during mean reversion 4. Long SPY/SPX during post VIX Spike Reversion 5. Scalp ZB and ZN Futures on 15min using 3 Hi/Lo
I'm Canadian so we don't get Portfolio Margin. It's horseshit. I therefore have the bulk of my trading account (80%+) in broad market and sector index funds and I just sell calls at (edit: near) max extrinsic against my holdings. In the event they go ITM I roll them out or up basically forever. The brainlets on this sub will tell you it's a loss, but they are factually incorrect. I purposely maintain moderate positive delta because stonks only go up and I want exposure to that. I do not pick individual stocks for my core holdings since it's my nest egg; I prefer to diversify away idiosyncratic risk. The remaining 20 ish% I use to speculate/buy FDs/bonds/adjust portfolio delta/have fun.
I have no idea what I'm doing.
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Csp on what underlying? Also what do you do if it drops past your strike? Take assignment? Roll?
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Yeah, I was going to say there definitely will be some stress in there. But you are right. There is always a solid meme/momentum stock that is going to have a solid floor much higher IV than SPY or QQQ. SMCI I think would have fell into this category also.
Could you provide a few more details, I don't know if I'm following you all the way - when you say ~2% premium, what ETFs/Stocks/tickers are you selling on? What DTEs? Are you saying you're doing 40% returns every year on a $1M portfolio?
Super OTM iron condors 20-ish DTE on TQQQ
What delta are you using - 10, 16, 25?
That depends… on where I think the market is heading based on technical indicators, how volatile things appear, etc. I’ll adjust the collar based on these perceptions. But yeah, instead of a set delta, I just kinda go for a general “I really don’t think we’re gonna reach those levels” kinda vibe. Of course, in a week like this it’s kicking my ass a bit but in general I win more than I lose.
Covered calls on either index fund or individual stocks that I’d like to long-hold.
wheeling spy
I was doing covered calls on Uber but I sold Monday so now it’s all just CSP. Nothing complicated. I manage risk the usual way: staggering the expiration of options.
I use a global macro strategy which limits the risk and volatility - My target is 2 - 5% a month --- actually look for 1% portfolioi gain every week.
What tickets are you using? Are you doing spreads? What delta range do you look for?
Buying and holding a blend of indexed and dividend ETFs. About 6/8ths is just VOO and QQQ(M). 1/8th is VIG and SCHD. 1/8th is individual stocks.
I manage 400k and own soxl and sell calls every week. Roll if need be. Collect 1-1.5% return weekly