Finally restarting my trading Journey, haven’t really done any besides some FOMC plays here and there since April 2022. I’ve spent a lot of time looking into styles and systems to determine what I think will work best for me and that is Theta Gang with an emphasis on acquiring shares.
I think most of the time I see people very afraid of assignment while trying to squeeze out bits of theta, I’m looking for a different approach. I am looking to utilize CSPs as a means to DCA into stocks I can hold “long” term, but eventually letting go via CC assignment. You can say it’s just the wheel, but I’m looking to emphasis share acquisition above theta profits which I think is a different outlook than you usually see for the wheel.
I won’t be updating this very often as it is a very slow and patient style, waiting for things to hit points I’d like to buy at as well as accumulating the capital to do so. Account wide profit will be a little tricky as I will be adding cash to it as plays arrive for awhile while building up. My goal is to have a diversified portfolio of 25 or so stocks being utilized in either side of the wheel.
Todays play was a CSP on UNG, $10 3/17 expiry. Reasoning is that $10 has seemed to be around its low for the last few years, seems like a good point to try and DCA in. Capital used 1K, credit of $86 (should have placed a higher sell, but market ordered for my first play/mistake to rennet and work on). Should it hold above 10 for the duration I will have an 8.6% return in roughly 45 days. If it falls I acquire 100 shares at a CB of $9.14 per share to CC above.
Added another 3/17 UNG CSP, this time at $9 for $1.00 per share. Liked the pricing on this strat at $10.60, like it more at $9.30. Gonna try to keep legs on any stock at 5 or less, so I’m comfortable getting a 2nd one in this range to average down.
Meant to edit this awhile ago as I added 2 more on 2/1 and 2/3. Both $9 strikes for 3/17, one sold for $1.16 per share and the other for $1.55 per share. This brought my total to 4 CSPs, the one at $10 for $0.86 and the 3 at $9 for an average of $1.24
Took assignment on all 4 contracts today. This strategy is largely a game of perception and can be seen through a variety of lenses. My total cost for these 400 UNG shares was $3,242, an average of $8.105. Current price for UNG sits at $7.79 so no matter how you slice it I am currently down here. However, using CSPs instead of outright buying shares at the same time as I sold my CSPs saved me $458 off of the $3700 of capital I used. My brokerage shows a cost basis of $9.25 as it does not include what premiums have been collected. So you can see this position as a 16% loss, a 4% loss, or an incomplete with plans to turn it around via CCs and natural growth back to normal levels.
I do feel a bit over leveraged and will look to offload 100/200 shares on a Green Day via an ITM CC. Even on a very red day like today any 45+ day CC will set shares up to sell with premium at a better price than it is at currently, assuming the stock doesn’t completely rank further below said strike price. I will likely do both sets at a $7 strike on 5/19 that currently has a premium of $1.55, but on a run up that premium will be higher and I’m not attached to the date (should a run up take a few weeks I will write it out further) other than valuing time for theta.
Saw UNG up nearly 5% this morning, decided that was a good enough point to take CCs on. Sold 4 contracts for May 19 $8 for $0.40. I also took another may 19 $8 CSP for $1.40 I forgot to update in here last week when it broke below 7.
Total invested up to $4500
Premium collected $598
Assuming assignment on the CSP I will have 500 shares with a CB of $7.804 per share.
Current UNG price $6.78
Haven’t updated this in awhile, have dabbled in other trades but am going to keep this journal focused on my wheel plays.
UNG I had 500 shares at a $7.804 average CB. Looks like since then the moves I have made are:
Being assigned that last put I mentioned to go from 400 to 500 shares
Rolling my 4 CCs closing 2 out at $0.01 and 2 at $0.02 while opening 4X 6/23 7.5 strikes for $0.46 each.
I sold 3 more CSPs on here, a 6/16 7 strike for $.049 and 2 6/16 6.5 strikes for $0.31
And finally selling a CC on my last set of shares available, 7/14 6.5 strike for $0.47
This totals out to 500 current shares all locked in CCs
3 outstanding CSPs for an additional $2,000 into this play. I thought about rolling my 7.5 CCs that have almost bottomed out (currently could close for 0.04) and will likely do so in the next couple days to set new ones on this small uptrend.
I also attempted to start a position in SOFI, wound up missing assignment but collecting $224 in premiums, haven’t decided if I will include that in a position but that will probably be based on how soon I try to get back in.
Seeing how bad UNG has performed from the time I started trying to get into it (down 40%) through all of this and only being down like 11% vs just flat buying today is kinda cool to me. I am at a point where I’d like to test out diversifying option leverage. Long term I’d really like 500 shares so I will be keeping those legs around the same spot I have been and using any additional legs to take positions that will generate more but that will leave them more open to assignment
Current Wheel Positions
UNG
Total invested raised from $4,500 to $6,500
Premium collected up from $598 to $1,082
Assuming assignment on puts I’d be up to 800 shares with a CB down from $7.804 to $6.7725
Current UNG price is $6.23
Edit- did roll those 7.5 CCs. Closing for .05 and selling 6.5s for .042 adjusting these numbers accordingly.
Moving focus back to this thetagang/share farming plan with a quick summary on my two positions I’m looking to keep working on (in addition to more eventually)
1 UNG: 500 shares currently unlocked from any position with a cost basis of $6.496 per share, will sell CCs on next spike over 7
2 SOFI: 0 shares, +$224 in premium. Looking to sell 2 November CSPs today