Day 116

Market continues to be choppy and that seems to be suiting the way I have traded - although I have no clue what that way is! I only say it because I made a bit of money.

Portfolio Status

Here is the current portfolio status, including unrealized Profit/Loss. My current net liquidity is just under $49K.

Here is the entire Year to Date P/L list for closed positions - I added previous post's list here for comparison.

My overall profits for the year is now up to ~$3.7K, moving up by ~$1.4K since the last write-up.

AMZN

I had a Strangle on in AMZN (8/21 $225 - $265). When AMZN moved down and started testing my $225 Put position - I followed the mechanics and closed the $265 Call side - could have rolled as well, but earnings was too close. Post earnings, AMZN saw a big up move (currently trading at $271), and I was able to make a nice profit of $473 on the overall Strangle. I got lucky in first AMZN moving down in price, and second in making the decision to close the call and not roll it down since AMZN definitely breached the original $265 strike I had sold the naked call at. While I got lucky, I am now too scared to sell naked calls in tech stocks!

CMG

I sold a Chipotle (CMG) 8/21 $30 Put and scalped $27 on a tiny bounce.

DRAM

I bet on a bump in memory stocks and had sold a DRAM 8/28, $50 Put, but the position was not moving much and I lost faith in the sector seeing any major bounce in next few days, so I closed it at a $253 loss.

HOOD

HOOD fell way below my expectations, and instead of adjusting my existing position I sold two new Puts - one after closing another. First a 8/21 $80 Put, then closing it on a tiny bounce and then when it went down again, selling another Put this time for 9/4, $75 and closing it again - trying to ride the wave up and down.

INTL

Sold a 9/4, $75 - $135 Strangle in INTL and followed the same tactic as the AMZN trade - closing the call first and put later. Made $117 on the overall Strangle.

LULU

I was short LULU, and made $61 on the 7/24, $120 call I had sold.

NDX

I tried a ticker I had never traded, the NASDAQ-100, NDX, and sold a Call Spread one morning when I woke up (I am in Pacific Time Zone and market open is at 6:30 AM for me), saw NASDAQ was red, and wanted to express a bearish opinion. I made $228 on a $2500 risk in about 42 minutes. I sold a 7 DTE call spread - $28,475/$28,500, and NASDAQ continued to fall for the next few minutes, I immediately locked in the profits and took the risk off. However, I don't think NDX is for me - it's too big! I don't want to risk $2500 on spreads since the spreads part of my portfolio is consumed by SPX already! Perhaps one day when my account is bigger!

NFLX

Lost faith in NFLX, closed my 8/21, $66 Put for $21 in profit.

NVDA

I was bearish and lost $266 across multiple trades. Well I lost $306, but then scalped $40 back - also via a bearish call spread. The main loss was a misread on my part where I thought I had a free Put on but in reality I had paid for it. I want to forget this one quickly as this was a stupid trade.

SLV

I was bullish and had sold a 8/21 $50 Put, but Silver didn't quite go anywhere so I closed it for a tiny $17 scalp.

SOFI

When the entire market was red, I thought I will sell an In the Money Put (9/4, $16), and then close it on a tiny bounce. And that's exactly what I did. Scalped $20.

SPCX

Sold a 8/21, $85-$150 Strangle. Followed the AMZN pattern of closing the call first (like I said naked calls now spook me) when the price moved down, and closing the put when there was then a small bounce up. Added $60 to my SPCX profits - I am now up $595 for the year in SPCX. This seems like the true power of options - get it right - and you make money without ever buying stock. Hope I have not jinxed myself!

SPX

I traded multiple Iron Condors.

As per an AI analysis I ran for the first half of the year, the SPX trades had generally been profitable, but the Zero DTE and haphazard nature of trading where I sometimes had spreads and sometimes had condors meant I didn't quite know what parts of the SPX trades were working.

For July, I cut down on Zero DTE trades, having zero such trades for 30 days but gave in to temptation today, and executed 1 Zero DTE today (July 31). However, I didn't try to predict direction - I sold an Iron Condor at around 7 AM at the expected move, and bought back the legs one after another as the price moved up and down. Scalped $85 in profit on a risk of $500.

Outside of this excitement, for the remaining 30 days in July, I placed boring Iron Condors on different days, taking profits off whenever I thought price had moved too far one way or another. I ended up with $635 in profits.

Including the Zero DTE profit, in total, since the last write-up, I made $720 from SPX trades. At any given time, I had between 1 to 3 trades on, with the max width being $25. So I was risking $1000, $2000, or $2500 on these condors.

Market Recap

SPY is at ~$746, and QQQ is on ~$687. Both went slightly up, having a slight mid-week spike before ending with a modest increase.

VIX is ~16.

Current Positions

I have two positions on to collect theta - and one is my always-on hedge in SPY.

I sold a HOOD 8/21 $95 put, which obligates me to buy 100 shares at $95 if assigned, in exchange for premium up front. Since then HOOD has dropped more than 20%, pushing the strike deep in the money and making assignment likely. One of the downsides of trading options while having a full time job is you miss these moves where ideally you spot the move and get a chance to roll before your position goes in the money. With the position already deep in the money, event at 21-DTE today - I had to accept that assignment on this position is likely. So what can I do - my plan from here is the classic wheel: once I own the shares, I sell covered calls repeatedly, using the premium to grind my cost basis down toward breakeven. The main point that makes this work is that my effective basis isn't really $95, it's $95 minus the put premium I already collected, and every call premium I bring in lowers it further. So the recovery plan is just "keep reducing my basis until the market price catches up to it.".

The bet embedded in all this is that HOOD stabilizes near current levels rather than falling much further. The danger isn't a fixed price like $70, it's the gap between the market price and my basis: if the stock falls far enough below my basis, every call I'd want to sell is either worthless at safe strikes or below my basis at strikes that pay real premium, forcing a choice between negligible income and assignment that locks in a realized loss. Taking assignment on a stock I'm bullish on isn't the contradiction it feels like, even though I do not like taking assignment, and the real discomfort here is owning at an entry price that's now stale against a market that moved against me. Let's see how it goes - maybe HOOD goes out of the money before expiry and I am out with a scratch.

The second position I have on is in SPCX. I sold a $90 Put today with just a week to go. This is kinda/sorta an earnings play although I don't know what earnings even means for a stock that has barely spent a quarter after IPO. I am betting SPCX doesn't fall 20% after earnings, allowing me to keep the premium received for taking on the risk.

The last position I have is a SPY hedge - you actually see 2 positions in there but one expires today. This is my always-on hedge (see my post - The Arithmetic of Survival: "One Path" and the Geometry of Wealth).

What's Next

Another month gone. There is now 5 months remaining in the year.

I am continuing to stay mechanical.

What does mechanical mean to me? It is the following rules:

• Look at the Symbols I typically trade, ranked by IV - high volatility typically implies higher premium
• Look at the Expected Move range for the Symbol for 30 to 60 DTEs. Expected move means I don't have to go chase ten different indicators/charts, etc. for whether or not the price is right to enter a trade, or what is the right price.
• See the volume being traded at those price points on the date I am interested in to know that there is enough liquidity at those positions to get in or out
• See the Bid-Ask spread on it and whether it is tight/close enough to avoid slippage
• Express my bullish / bearish / neutral opinion by simplest trade setups possible - such as simple Naked Put, Put/Call Credit/Debit Spreads, Iron Condors, Jade Lizards, and occasional Strangles.
• Take assignment only if you miss to roll forward for credit before the position goes in the money
• For VIX under 17, stay under 30-35% of my overall buying power. As VIX starts to increase, go up to 50% of buying power if there are opportunities.
• Do not let spreads/condors consume more than 10% of net liquidity at any given time, mainly because losing on spread locks in the loss and I have no room to maneuver if I get stuck.

I will trade some Zero DTEs, some calendars, and some butterflies depending on what's my risk appetite at the time, but these are going to be few and rather limited.

So far some trades have gone against me, but many have gone in my favor. I am realizing that even with fees, small wins stack up - or at least give me the confidence to keep going when I see a string of losses. Overall it seems like I am able to recover well. The first half of the year has given me profits. The goal for the second half is to defend it, and only then think of adding to it. I feel optimistic. Let's see how it goes.

Thanks for reading.

📌 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.