Day 118

The market made new highs this week. I have been scalping some bearish positions, and am currently still short a couple of stocks now in the September expiry, and staring down the market to see who blinks first!

Portfolio Status

Here is the portfolio status, including unrealized Profit/Loss. My current net liquidity is ~$54K.

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 breached $6K for the first time, moving up by ~$1.6K since the last write-up.

This week, I traded several symbols for the first time. Here is a strategy breakdown instead of my usual symbol-level breakdown.

Iron Condor

• MSFT
  • Put Spread at $460-$465 + Call Spread at $525-$530 ($500 risk)
  • Closed for +$19 in a couple of hours
• SPX
  • 1 DTE: On Aug 10th, Put Spread at $7745-$7750 + Call spread at $8000-$8010, expiring August 11 - used SPX Global hours (i.e., placed this trade before usual market open - 6:24 AM Pacific Time for me).
    • Net risk of $1000 to the upside and $500 for a downside move
    • Closed for $100 in profits in about an hour (7:28 AM Pacific time)
  • Zero DTE: On Aug 11th, Put Spread at $7730-$7735 + Call spread at $7785-$7790, expiring August 11 - used SPX Global hours (i.e., placed this trade before usual market open - 6:05 AM Pacific Time).
• Net risk of $500 on either side
• Closed for $100 in profits in just over an hour (7:57 AM Pacific time)
• 3 DTE: On Aug 11th, Put Spread at $7680-$7685 + Call spread at $7825-$7835, expiring August 14 (placed this trade at 6:48 AM Pacific Time).
• Net risk of $1000 to the upside and $500 for a downside move
• Closed for $55 in profits later in the morning

Call Credit Spread

• NDX
  • The entire market had a big move up. A few hours after the open I speculated that the top was in and market wouldn't keep rising anymore on that day. I usually don't trade NDX (only traded once before) but expressed my extremely short term bearish sentiment by selling a Zero DTE Call Spread in NDX. Sold $30130 Call and bought $30140 call, a net risk of $1000. Received $200 in premium. I was right on the speculation and let the trade expire, keeping the entire premium as my gain.

Calendar Debit Spread

• AMAT
  • Sold a debit spread heading into earnings, paying $573 to sell Aug 14 $600 call and buy Aug 21 $600 call
  • I was hoping to manage the setup as a whole but ended up managing the legs individually. I bought back the Aug 14 call I sold when AMAT moved down one day, and then sold the Aug 21 call a couple of days later when AMAT moved up. Net gain +$122.

Strangle

• AAPL
  • Sep 18, $280 Put - $340 Call
    • +$32
  • Sep 18, $285 Put - $330 Call
    • +$41
• SPCX
  • Sep 18, $95 Put - $215 Call
    • +$40
  • Sep 18, $100 Put - $210 Call
    • +$39

Naked Put

• AAPL
  • Sep 18, $285 Put
    • +$55
• SPCX
  • Sep 18, $120 Put
    • +$45
  • Sep 18, $105 Put
    • +$18

Broken Wing Butterfly

I like placing these butterflies as a quick shot on an exact price market will pin at the end of the day, and prefer to place them broken, i.e., one of the legs being longer so I get some initial premium credited to me. This way if market moves away from my strike price, I get to keep the original premium.

• SPX
  • Aug 12, Zero DTE: $7755/$7760/$7770 - an attempt to guess the closing price for the day. Sold 2 calls of the strike price ($7760) and bought a call each on lower side ($7755) and higher side ($7770). Risk $410 to make a max of $590. Premium for entering the trade: $90. Closed when net profit was $85.
  • Aug 13, Zero DTE: $7785/$7890/$7805 - similar setup as above, with higher risk. Risked $695 to make a max of $805. Premium for entering the trade: $305. Closed when net profit was $180.

ZEBRA (Zero Extrinsic Back Ratio Spread)

I traded a ZEBRA for the first time. This is a premium buying strategy and not a selling strategy, and that is why I have been reluctant to try it out, but I saw Apple see-sawing between $303 and $306 and thought if I could mimic buying a 100 shares of Apple at $303 and see out a 1 or 2 dollar move up, I should be able to make a hundred dollars for the trade.

A ZEBRA mimics a near dollar for dollar movement in stock price, at a much lower cost. Here is the structure - sell one at the money call, and buy two in the money calls, getting close to a total of 100 positive deltas across the setup. Selling at the money call would typically be roughly -50 deltas, and buying two positive 70 or 80 delta calls gets close to a total of 100 positive deltas.

• AAPL
  • Expiring Sep 25, Bought two $290 calls, sold one $305 call for a net debit of $2,985. Note that buying a 100 shares at these prices would cost nearly $30K, so this setup helps mimic 100 shares of the stock as nearly 1/10th the price. I got ~90 deltas.
    • Made +$178, closing the position when Apple saw a small move up to $306.

I don't think I like this strategy though - I have gotten into a good rhythm with selling for premium, and anytime I pay up to buy something, I immediately feel uncomfortable. But it's a useful tool to have to express bullish opinion with a defined risk - the risk here is that I lose the entire debit if I am wrong and price moves in the opposite direction and never moves up within my expiry. Of course, I can roll it out like other trades, but if an overwhelming majority of my trades are in selling, I don't think I would intuitively know whether buying makes more sense than selling.

Custom

• NFLX
  • Sold a Sep 18 $72 Put to finance a Sep 18 $84 call. These were both expected move prices, and I was betting that NFLX might see a rally.
  • Closed for a $54 gain when NFLX moved up. In hindsight I closed early as NFLX has continued to move up - but that's ok. I have lost money on NFLX this year so I am falling back to scalping tiny wins which is quickly becoming my forté across the overall portfolio.

Market Recap

SPY is at ~$776, and QQQ is on ~$731. Market continues to be in a melt up mode, continuously edging higher.

VIX has deflated and is now near ~14.

Current Positions

I now have a decent amount of capital in the account, so I parked most of my cash in SGOV, BIL, and T-Bills to earn some interest as long as the cash sits idle. There are some nuances to each, mostly in terms of buying power reduction, and I didn't quite have time to figure all that out so I bought some of each. What I understand so far is that buying T-Bills have no significant buying power reduction, and for both SGOV and BIL, there is ~50% buying power available. For example, right now I have $10K in SGOV, so tastytrade would allow me to use $5K out of it for any option positions I make. Other brokerages may have same or different behavior.

I am leaning overall bearish in my portfolio. I am short 40 deltas, collecting 38 in theta out of a remaining 2552 in extrinsic value.

I have short positions in PLTR and CRWV. Everything else is in a neutral position, with Strangles slightly outside of expected move and Iron Condors at expected move for any given underlying.

What's Next

I am on a break from work and that has given me a great opportunity to learn something useful. Options trading has taught me to make faster decisions around risk and tuning my decision making process to be comfortable with losses along the way.

One of the fascinating things about this journey has been the amount of discovery I have had between theoretical concepts and trying to deploy those concepts using my own capital. Trades that look great in theory and in backtests would not even get filled sometimes, an ideal market may not present itself for the strategies you are comfortable with, and the forever temptation to break discipline in the face of losses.

I hope to one day look back on this journey and remember some of the in the moment decision-making. For now though, I am surprised how much I have started to like Monday mornings!

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.