Alex's Leisurely Journey to Tophats and Monocles

Last time these posts helped me to rein in my port-destroying autism so here’s hoping it works this time around too. I’ve opened a margin account so I’ll be able to sell PMCCs and have lower bp requirements for selling puts so with this in mind I’m going to start with a goal of 5% on my port per month. I don’t intend to actually use any margin.

Last Monday I had the following plays planned out for when the wire transfer was complete:

  • $CCL PMCC

  • $MARA CSP

  • $SNAP PMCC

  • $ASTS PMCC

  • $SOFI CSP

My transfer finally went through on Wednesday morning and I didn’t want to take any positions before FOMC minutes, by which point all of these were up pretty significantly so unfortunately I missed all the entries I had planned. I’m going to wait for some red days for new entries on those plays but for now, I guess I’ll be on the lookout for something new.

In the meantime, I’ll probably keep up with the typical buying calls/puts but with the added PDT risk It’ll be very little day trading unless I decide to transfer some money over to my cash account.

I went with the FOMC algo play today so I’ll do my first update tomorrow morning.

Glad to be back in the casino! :yong:

Starting account value: $2502.60

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The only play yesterday was the FOMC minutes algo scalp. I started to enter my position 4 minutes before the release and averaged down 1 minute before for a cost average @1.08 on the 0DTE 385c (ATM). I went in with roughly 25% of my account. I originally set my sell limit at 1.30 but I adjusted this to 1.20 when the first candle wasn’t like all the previous times. My sell filled at 1.20 for an 11% gain.

EOD account value:
image

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Typically I completely avoid buying options before earnings because I could never justify IV crush but today I tried out something a little different. I bought a 19 Jan 2024 $AEHR 12.5c @ 8.50 about an hour into open with the intention of also selling a Jan 20 2023 20c at the same time so I could try to lessen the impact from the IV crush but remain exposed to any upside from earnings. I tried to sell the 20c all day and adjusted my limit at least 7 times throughout the day to match the ask or go a few cents below but somehow completely avoided a fill even though orders were being filled at my limit price, just a liquidity issue I suppose. It was getting pretty late in the day so about 8 minutes before market close I just kept replacing my order while decreasing the limit by 0.01 and eventually got a fill @ 0.66 which was a measly 1 cent above the bid.

I got bad entries on both legs of the spread even though I was actively trying to manage my limits. I’m usually pretty good at that but it seems like today was an exception, hopefully I’ll still profit from the play :smiley:. I’m putting that emoji there cause its kinda funny when they get really big on TF.

EOD Account Value: $2,496.14

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ahhhh the joys of AEHR order filling on options. gotta go for the mid area usually. spread is kinda funky

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$AEHR had a really nice pushup after earnings that was beyond my expectations so I ended up closing both legs of the spread for a net profit. I took my position with the intention of rolling the short leg up and out for a credit and treating my LEAP as a long-term hold to sell PMCCs on but I wasn’t super comfortable holding when the stock was already up so much. A bit of a shame because I limited my profits so much but still was a nice gain, I definitely hadn’t anticipated a 45% gain for $AEHR stock.

Opened a $CCL bear credit spread 9.5c/11.5c Feb 3 for a credit of 0.42. Just took this off technicals where there looks to be resistance ~9.20 because I wanted to practice a cheap credit spread. I’m actually bullish on CCL long-term and I’m hoping that I’ll get a chance to enter LEAPS at around 8.00. $CCL has a 3-month SPY Corr of 0.61 so the price will also be affected by CPI, overall not super confident about this play.

I also had orders in for 1x $MARA 3.5 CSP and 1x $SOFI 2.5c/5c PMCC but those didn’t end up filling. Patience is a virtue.

EOD Account Value: $2,703.61

Did a few different trades today.

I entered a Jan 13 37p/Jan 20 37p calendar spread on $DAL to see if I could profit from IV rush (strategy outlined a bit more here). I planned to enter 10 contracts on each leg but thats where tastyworks caps commission and I already felt robbed so I doubled it and went for 20 contracts on each leg for a total cost of around $400 with about $25 being fees/commissions :face_with_thermometer:. I jumped the gun a little bit and entered in before IV was optimal, getting my fills @ 0.19 when they sat @ 0.15 for most of the day. In the last few hours they went up to roughly 0.20 so if I’d just been more patient then I could’ve been quite profitable already, there was no way of knowing that though I suppose. $DAL remained pretty pinned to 37.00 the entire day so I didn’t have to do any delta management until EOD where I opened a put to bring my total delta back to 0 at the cost of some theta gains (also helped reduce my negative gamma and gave a slight vega increase).

I STO 1x $BYND Jan 13 13.5p @ 0.50 and 1x $AFRM Jan 13 9p @ 0.28 which are both chilling at around B/E. My CCL position is down a little bit but I’m keeping it open for now, it still has a while to decay.

All in all my account technically ended green but because of commissions and fees I’m actually at a slight loss compared to last week. Hopefully I can learn something from the $DAL play.

EOD account value: $2,687.39

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I didn’t have time to update yesterday so this is gonna be two updates in one :smile: :+1:.

10/01/2023
Sold the $DAL put protection I bought for the JPOW speech at open at a $5 loss and just left that position alone for the entire day.

Bought back my $BYND 13.5p @0.22 to collect 54% of the potential premium and STO another AFRM @0.38 to bring my average up to 0.33.

EOD account value: $2,700.00 exactly

11/01/2023
Bought back my two $AFRM puts @0.10 to collect 70% of the potential premium.

Closed my $DAL calendar spread @0.20 to completely break even after commissions. I do think this play might have merit but I need to do more research on calendar spreads and IV before I try it again. I believe I should’ve gained more based on how theta positive that position was, even with the stock price increasing up to $38.00 when I sold. IIRC my delta was around -35 when I sold but my theta since Monday was around +60. I think I’m probably misunderstanding something about the greeks. I would’ve liked to hold this position but I wasn’t going to take that risk with CPI tomorrow. I’ll probably look more into these in the morning.

I’m holding my $CCL position through CPI because it still has a little while to expire but it’s currently sitting at -$22.

Also opened fuck_cciv’s $RUM position for shits and giggles.

EOD account value: $2,712.71

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Boring day for the journal. I took a 39p/39p calendar spread on $DAL for some IV crush tomfoolery 5 minutes before market close.

EOD account value: $2,680.82

Starting university again on Monday so probably not going to be updating as much. Not doing any more trades today.

I BTC the short leg of the $DAL spread at 38 resistance to put me in a net bearish position and started to scale out of the long leg at around 37.50, the spread on Jan 20s was annoying but managed to fully close the position at a 20% loss inc commissions. Still have the CCL + RUM position, the RUM put has a wide spread so makes my account value a bit ambiguous.

account value: $2,640.40.

I’ve been trying out some more calendar spreads around earnings. I’ve had some success recently with NFLX, LMT, GE, and RTX to name a few. Current positions are just some more calendar spreads for MSFT. Feeling like swole with these bad boys.

Closed all my $MSFT calendars for about 15%. The strike prices I picked weren’t all that great so that’s something I’d like to improve on. Currently holding a couple $TSLA 135/155 calendars and a few $IBM 136/146 calendars for earnings. Account is about 40% cash.

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$IBM and $TSLA both had bigger moves than expected on earnings so were pretty breakeven at open. I had sell limits for $IBM at 1.20 for the first few hours but eventually reduced that down to 1.03 for my breakeven after commissions but didn’t end up with a fill there. Ended up closing the call calendar since the short leg was 0.01 and the long leg was only 0.08, the thought process being that it would be easier to get a fill on just the put calendar than both at once. Currently still have the put calendar open with max profit being if $IBM is at $136 at some point tomorrow.

For the $TSLA position, profit jiggled between +0% and +15% for most of the day, I had a sell limit at 4.50 for the entire day that never hit but since this is a long theta position it doesn’t hurt much to hold. Max profit for this position should be if $TSLA is at $155 at some point tomorrow.

Took some more double calendars at EOD, same positions as Ni,

  • 150p/160c for $AXP for a 1.49 debit

  • 220p/230c for $V for a 1.98 debit

Also tried to get a 1.85 fill on a 182.5p/192.5c for $CVX but didn’t end up getting one.

Account is about 14% cash.

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Closed the $V position for about +20% near the start of the day and just closed out my $TSLA and $AXP positions for a loss. Both $TSLA and $AXP moved so far from the strikes (and also because it’s expiration day on the short legs) there’s practically 0 extrinsic value left in these so I was negative theta (from the long legs) and the positions went from neutral to directional bets which isn’t what I wanted. Sucks that I went in heavier on the $AXP position than $V, ideally I would’ve had equal capital in both but $V was difficult to get fills on. I also just closed out my $IBM for b/e. The losses today were actually smaller than I’d expected but they were notable nonetheless.

Also looks like the $CVX position I tried to get a fill on last night ended up being a loser so I dodged a bullet there I suppose, always a silver lining haha.

Looking forward to next week’s earnings :pepeevil:

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Opened some more double calendars today. Got a 34.5p/38.5c for $GM at a 0.58 debit and a 109p/117c for $XOM at a 1.70 debit. Also tried to get a 41.5p/45.5c on $PFE but couldn’t get a fill. I used the data from this thread to decide which plays I would do today.

I’m currently still looking for the best way to decide which strikes to use for the wings, right now I’m using the expected move to decide and trying to stay as directionally neutral as possible because time has shown that I’m not very good at picking directions.

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I wanted to close both positions near market open today because that seems to be the best time for profit but unfortunately that was in the middle of my stats lecture :slightly_frowning_face:. I set some orders from my phone and ended up closing the XOM spread at 1.88 and the GM spread at 1.62, after commissions that’s +8% and breakeven respectively. If I had time to watch, it looks like I could’ve had marginally better fills but at least today was green.

The plays I’ll look to enter at 3pm EST are probably going to be calendars for $GSK and $SNAP. The current IV to historical IV comparison on $GSK looks good. For $SNAP, the market is pricing in a lesser move than the historical average but the difference in IV across the expirations looks too attractive to pass up. Dates for the $GSK position will probably be Feb3/Feb17 but for $SNAP I’m considering adding an extra week for the IV difference.

IV on the short leg doesn’t seem to drop as much as it should after earnings release which makes these plays not as profitable as theorized. That’s something we need to look into because we had the best case scenario play out today for GM earnings and still there was not much profit to be had (unless you had a directional calendar).

Double calendars only form the peaks at expiration, since we’re closing these positions so early it looks like they have more of a negative quadratic with the centre around the midpoint of the wing strikes. I started to look into whether it would be better to take a single ATM calendar (puts or calls, I don’t think it actually matters when ATM) since they’d have lower commissions and potentially a better shape for closing so soon. Anecdotally, however, my first calendar play was a single calendar for $DAL earnings and that was a bigger loss than I’d expected.

These are kind of annoying to model since most calculators don’t handle the IV differential very well but I think that for the plays early in the week, best case scenario is a very muted move.

It looks like IV isn’t falling as much as expected, whether that’s due to FOMC being in the same expiration cycle as the short leg remains to be figured out fully.

Had some orders in for $SNAP, $MO, and $AMD. I thought only the $SNAP orders were filled but it actually looks like I got partial fills on all of these, nothing complete though.

  • $SNAP 9.5p/14.5c Feb3/Feb24 - Trying out a longer expiration on the long leg here because the IV across expirations looked a bit different for this one.

  • $AMD 71p/79c Feb3/Feb17

  • $MO 44p/45.5c Feb3/Feb17

As The_Ni said on TF, the commission can really hurt with this trade so it might be best to only enter when the debit is great enough. Tastyworks caps my commission at 10 options per leg so for the cheaper debits I can enter enough spreads to offset that. For my port size, there’s a bit of a limbo area between 0.50-1.00 where I don’t want to enter that many positions but the commission is also quite a substantial cost. I’ll try to look more into ATM single calendars for some scenarios since they should have a cheaper cost to enter and might do better on stocks with a low implied move.

big emoji for TF
:yong:

Yesterday I took a 145p/165c double calendar on META. Even with the price blowing straight through my upper wing, I still sold for a seemingly small 25% loss which makes these plays look quite forgiving. I can’t be 100% sure that fill wasn’t a fluke as the spread was pretty massive at open.

The largest issue with double calendars comes from liquidity, it can be difficult to enter/exit since I’m trying to fill 4 different contracts at once. Going forward I think I’ll focus more on the larger companies because I’m aiming to close these positions at market open. Option liquidity isn’t as important if you plan on holding until expiration of the short leg.

Took two double calendars last night.

  • AMZN 101p/115c for 1.95 debit

  • GOOGL 105p/115c for 1.34 debit

Both of these were directional calendars and neither went the way I intended haha. Fortunately they approached the other maximum point of the P/L graph and I sold for +25% and +50% respectively. The GOOGL spread actually maxxed out at +86% today but I decided to sell near open since I couldn’t watch the position. I held onto AMZN because it was pretty much in the centre of the strike valley which meant that I made more money if it moved in either direction and I was pretty much theta neutral at that point.

I think I’ll probably stick to taking these positions for earnings on Thursday AMC and Friday BMO. It’s a lot easier to manage when theta is making the short OTM legs worthless.

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