Day 106

Crazier than most weeks this year? Big move in the indices - the whole market is a meme stock!

Market Recap

Both SPY and QQQ gained over 3.5%.

SPY is at ~$679, and QQQ is on ~$611.

VIX has now come down to high teens, now at ~19.

Trading Update

With a big move this week across many stocks, I got lucky and got within ~$3 of turning profitable for the entire year to date.

I made $338 and closed successful trades in:

• AAPL (Strangle)
• HOOD (Strangle)
• NVDA (Strangle)
• SLV (Strangle)
• SPX (Put Credit Spread)

I also closed my fat-fingered TGT trade from last week at a 74¢ profit.

The SPX Put Credit Spread was my speculation that the markets had been going down a while so one or 2 moves towards upside could give me a profit. While I made a profit, in hindsight maybe I closed too early?

• Sold May 15 $6120 - $6105 Put Credit Spread on March 26, a classic 45 DTE setup, receiving $255 in premium
• Bought it back on April 6th for $180, netting a profit of $75

That was a 5% return in 6 days (ignoring weekends and holidays) on a risk of $1500 - seems low, but I will take the win.

Here is the Year to Date list - I added previous week's list here for comparison.

Trade Ideas I am Thinking of For Next Week

PLTR (Palantir Technologies Inc.) has a Trailing Twelve Months revenue and profit of $4.5 Billion and $1.6 Billion respectively.

PLTR has moved down quite a lot this week, out of sync with the overall market that moved up sharply in the same time.

When you look at the Option tape for PLTR for 41-DTE, here is how it looks:

What this tape tells me is that traders are thinking PLTR is going to move up in the 41-DTE window.

1 Standard Deviation is in the $100 - $155 range. The expected move is from $110 to $150 range.

I typically would sell a Strangle at the expected move but because everyone is thinking PLTR may rise, I want to provide upside risk. And the way to do that is to buy an upside call option beyond the Strangle price to protect me. Thus the trades would be:

1. Build a Strangle

• Sell a $105 Put
• Sell a $150 Call

2. Provide upside move safety

• Buy a $155 Call

On this setup, if the price of PLTR stays between $101 and $153, then I get to keep $378. If it shoots past $153, I start losing some money, but the loss is capped at $122 (Call Spread Risk - Premium Received). In a margin account like mine, the buying power being used is ~$1500. The max loss shown is $10122, but that would mean PLTR price fell below the Put price point faster than I could close the trade at some loss or before 21 DTE. Since this is a game of probabilities, I like the odds that PLTR will stay in the expected move range it currently is right now.

This setup is called a "Jade Lizard". It is an options trading strategy popularized by Liz Dierking and Jenny Andrews on the tastylive network (formerly tastytrade).

The Jade Lizard was designed to allow traders to sell premium while eliminating upside risk. It is intended to be a neutral-to-bullish strategy.  It combines a short out-of-the-money call spread with a short out-of-the-money naked put.

By ensuring the credit collected from the trade is greater than the width of the call spread, the trader removes all risk to the upside.

It is often recommended to implement Jade Lizard on stocks below $75, so there is that. And also PLTR has earnings coming up before the 41-DTE expiry, so extra caution is perhaps necessary. Regardless, the Jade Lizard is a useful trick to have in my armor.

You can read more about Jade Lizard here:

Jade Lizard Option Strategy

A Jade Lizard is a slightly bullish strategy combining a short put and a short call spread. Learn how to trade it.

tastylive

And see a video in their own words here:

Portfolio Status

Here is the current portfolio status, including unrealized P/L.

I was able to close last of my option trades on Robinhood, and will be moving those funds into my Tastytrade account over the next few weeks.

For the foreseeable future, I am planning to just try to work on this single account for my options trading journey. I tried to give Robinhood more time to learn but it is just not there in terms of how I think about options and what I need from a trading platform as an occasional trader - I don't need all the bells and whistles but I also need enough of them so it isn't as much Robinhood as it is the way I have been learning to trade.

You can see some of the features I use in the screenshots I have been sharing. For example, on this page itself I shared an options tape above from TastyTrade, which kind of looks the same even on their mobile app. And I have gotten used to it enough to not care about the freemiums (such as no transaction fees) being offered by Robinhood. I am not closing the door totally though on Robinhood, I have left a nominal amount in their account. Perhaps I will revisit that again at a future date.

Now what I need to figure out is how to substitute the yield Robinhood was providing on the sitting cash with something equivalent in Tasty. Apparently I can buy SGOV but I am not sure how that affects my buying power. For example, if I buy $10K worth of SGOV, does that mean I lose $10K of buying power? I have a few weeks to understand and sort that out.

I think last year was a good learning experience, and this year so far I have stayed solid without losing a whole lot. Last year too, I started quite well and then got derailed - so I am cautious how the next few weeks go - since it was roughly around this time when the wheels start to come off for me last year. Fingers crossed I have better luck this time!

Thanks for reading. See you next week!

📌 Disclaimer: Nothing on this site is financial advice - I’m just here to entertain! Here’s my introduction, my trading philosophy, and some ground rules.