Day 117

The market is at its all time high. This rising tide has definitely lifted my account!

Portfolio Status

Here is the current portfolio status, including unrealized Profit/Loss. My current net liquidity breached $50K.

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 ~$4.9K, moving up by ~$1.2K since the last write-up.

Here are the symbols I traded.

AAPL

Scalped $38 by selling Sep 18 $280 Put and buying it back in a few hours after a small move up.

HOOD

Last week I wrote about an In The Money Put I had in HOOD and how I was staring at an assignment. Well, HOOD moved up and got close enough to my strike price ($95) so that I could adjust my positions. The net effect is I am now short a strangle ($75 - $105) for Sep 18 and I realized a small loss of $130 in adjusting my positions.

MU

I tried selling an Iron Condor speculating that MU wouldn't move around much. Scalped $67 in a few hours.

NFLX

Placed a trade, did not like the trade after putting it on, so closed it out. Made $16 in a couple of hours.

OKLO

A symbol I traded for the first time - OKLO, which had earnings, and I placed an earnings trade based on a tastylive trade. The expected move was not huge, so I liked a small directional bet, selling a Put (Aug 21, $39) to finance a bull call spread (Aug 7, Bought $44 - Sold $47).

Got lucky on it and made $115 in a day - I didn't even look at the price when closing - saw >$100 profit and immediately closed it out.

PLTR

Caught a big move in PLTR on the way up, now betting on stabilization and a small/big down move.

For earnings, bought a bullish calendar spread going into earnings - sold Aug 7 Call and bought Sep 18 Call on Aug 6th. And PLTR obliged by having a big move up, helping me gain $691 in the process.

Then sold an Iron Condor because IV was high, and scalped $41 in a few hours.

And as a classic gambler, I thought I had hot hands and so I then put that money and more on the line on the bet that PLTR will not move any further up than what it was post-earnings (in the short term). Sold a $10-wide Call Spread. Well so far, I seem to be wrong, PLTR has kept inching higher, and now my spread is In The Money! However the expiration is a little far out (Sep 18), so I have time on my side, for now.

Anyway, as of now, I made $732 in PLTR last week.

SPCX

SpaceX continues to have high volatility. Made $317 through several Put positions, typically having only one trade on at a time. For example, I sold and bought $90 Put, and followed the same with a $100 Put, then a $98 Put, then a $85 Put. I also sold and bought back a super wide strangle ($100 - $205) for a tiny gain. And all these small gains added up.

I don't have any current positions in SPCX but if IV continues to be high - I might continue to get in and out of these trades until premiums stay rich.

SPX

I sold several call spreads after the big move up, expecting the price range to stabilize in the next few weeks. I was able to close some of them when prices were moving up and down, and made some small profits along the way.

I also traded a Zero DTE, selling a Put broken wing butterfly expecting price to continue to move up, or move down enough to pin my strike. SPX never moved down that day and so I kept the initial premium I received. This was a very conservative trade - if you could even say that about a Zero DTE.

I made $100 through the classic spreads and $45 through the broken wing butterfly, with a max risk of $2000.

Market Recap

SPY is at ~$773, and QQQ is on ~$723. Market is in a melt up mode, continuously edging higher.

VIX has deflated and is now under ~15.

Current Positions

With VIX being so low, I reduced my exposure for now and am using only ~9% of my buying power. The above picture shows my exposure as a percentage of open positions.

I am leaning overall bearish in my portfolio. I am short 39 deltas, collecting 61 in theta out of a remaining 753 in extrinsic value.

What's Next

Last week I wrote about staying 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.

So - what does staying mechanical buy me? Why am I doing this?

The primary intent of this exercise has been to learn and understand risk taking, using the concepts of probability to prove out that given enough occurrences, the activities undertaken in this account should start to move towards a statistically likely outcome. As an example, if selling at the expected move leads to 84% probability of profit in keeping 50% of premium received, then out of some high number of occurrences (usually 200), a certain type of strategy should begin to show those attributes.

It sounds foolish and it is dangerous since the markets give you no situation in which several factors are truly under some sort of experimental control, and more importantly, they give me no guarantee that my account will not blow up and that I would be able to run my experiment forever. But until then, I will keep marching on.

I already now have a richer understanding of risk in markets since I began this journey ~20 months ago. And I have a fantastic personal dataset reflecting not just my strategies but also my discipline in various market conditions. The volume of experiments is getting harder to track manually though - and AI has now reached a point where it can answer a lot of my questions fairly accurately when I feed it my transactions. I am leaning more and more towards discovering patterns and blindspots using that approach. And so I am leaning towards pausing or stopping these public journals soon. Besides - the account size has also now reached a value that makes me uncomfortable sharing the number out in the world, and so I will likely switch to a content style where I do not need to share my personal account value to be able to log and share what I have learnt.

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.