Day 120

The market started cautious, eagerly waiting for NVDA earnings, and was effectively flat at start of Monday and end of Wednesday. Then there was a bit of move up with NVDA out with stellar earnings, and finally the rally faded a bit on Friday.

I rode the ebbs and flows and lost a few bets but eventually did quite well. I kept chasing volatility, with earnings and Zero DTEs being most of my trades. The wins of the past few weeks have given me enough cash cushion that on Friday I doubled-down on my good luck and kept betting on new SPX Zero DTE setups one after another, and they kept coming off right - every single Zero DTE bet on Aug 28 was right! I made $690 in a single day, read on for a breakdown.

Portfolio Status

Here is the portfolio status, including unrealized Profit/Loss. My current net liquidity is ~$58K.

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

My overall realized gains for the year went past $11K for the first time, moving up by ~$2.8K since the last write-up.

And now, here is a strategy breakdown for the week. As usual, all times are Pacific. Risk is the possible maximum loss, which is spread width minus premium received.

Zero DTE

Thirteen trades, eleven winners, with an epic culmination in 5 out of 5 winners on Friday!

On Monday, Tuesday, and Wednesday, I opened an Iron Condor with SPX at around 7 AM in the morning, and closed for 50% in profits a little while later.

The tricky thing with Zero DTE setups is that you need to be able to guess the direction right, or be quick to decide that the trade might not go in your favor and cut your losses when taking on large bets. I was able to do so this week when it came to cutting losses on SPX, but NDX is a big instrument and so even a small adverse move causes big pains. I was at the receiving end - a single NDX broken wing butterfly was my worst Zero DTE trade this week - the index burst through my strikes almost as soon as I had put the trade on. When opening, my trade was far away from the expected move, and yet it got breached in seconds! Which makes me scared of NDX - I stayed away from it for the rest of the week! NDX is cheaper to trade than SPX when it comes to commissions and fees, but I think I will wait a while before taking a shot again in NDX.

Anyway, a key component of my renaissance has just been volume, i.e., the number of trades I have put on in August as compared to any previous month. And I got compensated (and more) via a different shot I took - a $35 lottery ticket bought 11 minutes before the market close on Wednesday, betting that market will move down in the remaining few minutes of the day! NVDA earnings were due and my bet was that with everyone being bearish I could make quite a lot for just a small move down in SPX - and I did!

Longer Dated Index

The Monday 7300/7400x2/7500 butterfly was a cheap downside hedge for NVDA and Jackson Hole. I ended up paying the full $315, SPX finished at 7711, nowhere near my hedge. Maybe I could have bought it closer to the actual events - but I am unsure if it would have been cheaper or if I might have missed any potential early downside move. All in all - ok to lose this one.

On Thursday, I was bearish and placed a 1-DTE bear structure but the market moved against me so I quickly exited that trade for a small loss.

Earnings Calendars and Diagonals

Pretty much the same philosophy I used on LOW calendar last week - I sell the earnings week, and buy the next month - it works only if stock doesn't move a whole lot. I can't count on these though as something strategic - these are hit or miss and I still need to refine how I can turn a 50-50 shot to an advantage.

Defined Risk Equity Spreads

I am betting that TGT will stay wherever it is and not go any higher - the stock has seen a ~67% increase YTD when almost all other retailers are struggling!

Anyway I think these spread winners just about covered my trading expenses for the week.

Undefined Risk

The primary repeatable portion of my strategy - undefined risk via Naked Puts, Naked Calls, and Strangles!

SOFI continued to bleed money.

MRNA and SPCX continue to be kind to me.

I closed the far out in time SPCX trade and opted for a rather close dated expiry hoping for a small uptick before end of week - and the stock obliged.

The other trades were run of the mill expected move trades, triggering necessary rolls as their prices moved up and down.

Market Recap

SPY is at ~$769, and QQQ is on ~$716. Market again traded in a range - this week started flat, then went up, and finally settled a bit under the week’s highs.

VIX crashed to 14.4.

Current Positions

Over 75% of my cash in this account continues to be in BIL and SGOV.

I am almost neutral (very slightly bullish) across the current positions. I am long 9 deltas, collecting $100 in theta per day out of a remaining $640 in extrinsic value.

I have short positions in TGT, long positions in DELL, and neutral positions in HOOD and SOFI.

What's Next

One more day to go in August (Monday Aug 31st). Then I will ask Claude for a July vs August comparison.

I will be taking on more risky bets the remainder of the year if VIX remains this low.

I don't think TGT can keep rising the way it has - the stock is likely to slow down. I have some spreads on that I will most likely close and covert to naked positions instead. It's time for me to be properly bearish on this bull.

I will also be looking to cut my SOFI position outright and might sell the At The Money Call to see if it gets called away. I have tried to revive the trade the entire year and I think it is time now to accept that SOFI won and I lost. In my effort to keep reducing cost basis I feel I am just bleeding more cents on it than it warrants in the grand scheme of things in this account.

I had taken assignment of SOFI back when I used to think that you only sell Puts on stocks you want to own long term. But that assumed that I had done some analysis on a stock when the reality is I only liked the stock because every guru on Youtube liked it at the time.

I have come to accept my limitation - I can't do any long term analysis correctly at all. Besides - who really knows what long term is?

I am from the Netflix and Amazon Prime generation - I crave instant gratification - or the closest I can get to it.

I understand that the way I trade is not for everyone. But then I started this whole shebang because I was foolish enough to believe that I can make this work for me. And based on the past few weeks - I think it is working. And there is no sweeter reward than placing a bet on yourself and the bet coming off!

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.