By - Suncasa
Selling puts on stocks I want to own and then selling covered calls after I own them.
Same - business as usual for me. still CSP on companies I like, wheeling if I get assigned. Trying to keep on my 1% a weekly return goal (currently at 1.1%)
Dam 1.1% a week average thats awesome!
The idea here is that if the market crashes you end up owning some high quality stocks that will likely move back up faster . . .
The thing is this is the most basic theta strategy out there and it does not backtest well in bear markets. When you are expecting a downturn/deleveraging you need to play volatility. If you get filled on a short put at the beginning of a downtrend you are possibly looking at bag holding those shares and selling call strikes well below your break even for years to come. You do not want to have any exposure to being assigned shares when you are expecting a downtrend you want to be collecting decay on neutral/slightly bias strategies.
People should be looking into reverse IC's if they expect big swings or straddles/strangles if you have the capitol to do it properly. You want to start getting into more neutral plays when the market has been in a expansion phase for so long.
Let us know when we'll be in a bear market so we can all prepare!
I don't trade as you do and have never held shares for longer than a few months at most. Certainly not for years! But you're being overdramatic . . .
Except for being mostly in cash, the next best place to be IMHO is invested in high quality stocks as these are very likely to weather a down market.
If you think you can time the market to buy reverse ICs then please let us know when we should all be doing it!
I like you
I'll keep screaming it and EVENTUALLY be correct. The point is not trying to time the downturn its to be in a position to survive and profit even during those downtrends. It doesn't matter if it is today or a year from now or 5. If you are overly exposed to shares you will be blown out during a correction. And hopefully (has always happened up until now) the general market would recover fully but nobody can guarantee that would happen in whatever position somebody may be in.
Also, the "you don't lose until you sell" mentality doesn't take into account opportunity cost of that money you are tying up. If you have 70% of your portfolio tied up for 2 years trying to dig out of a hole you won't be making the income you should.
My last comment on this as you are set in your thinking and not willing to see there are different ways to trade . . .
If you trade properly keeping 50% of the account in cash, and have diversified stocks then the wheel can survive a crash, and in fact, come back very quickly based on the market.
See my report of how this worked for me. [https://www.reddit.com/r/Optionswheel/comments/lp22xe/how\_the\_wheel\_worked\_in\_march\_during\_the\_crash/](https://www.reddit.com/r/Optionswheel/comments/lp22xe/how_the_wheel_worked_in_march_during_the_crash/)
I am stuck in some stuff I got into last February. ARKK, PLTR..horrible moves. Bag holding forever. I’m not taking any assignment on anything. Biggest losers right now are two csps on AFRM 125 and 130 strikes. Expiring next couple of weeks. Hoping it retraces back up some.
you and i are literally in the same position except i closed out arkk and pltr puts for a loss. dont wanna baghold :x
I have 12/10 PLTR 22.50 csps. Also have one ARKK 112 12/17. More than likely buying both back at large losses. Honestly, I’m tired of both. lol
yeah i’m super tired of both too. been reflecting recently and i’m likely going to start wheeling $nvda and $spy when i have enough money. imo CSPs sound great but for them to be profitable, they put us in a lot of risk esp when the bear market comes
Just curious, have you been rolling those since February?
No, opened them awhile ago. PLTR was up at 25 or so.
I've got CSPs in CCL and PLTR that I will baghold on.
This is why it is critical to trade stocks you think are good investments and are willing to hold for some time, even months.
Just an FYI short of MM firm employees, CFA's, and insiders I am (technically) more qualified than anybody in here to give advice professionally, obviously doesn't mean I am always right but by license and designation I am literally more qualified.
But take it or leave it, decisions that others make or thoughts about what I said have no impact on my wallet or my well-being. Thanks for trying with the snarky remark though!
I’m sorry, truth hurts. You know it best.
Can you explain more about reverse ICs?
When you say neutral, do you mean neutral sideways... or neutral volatility?
How would you know which to pick?
This response leaves so much to the imagination for a newbie
Best thing to do would be to search reverse iron condors. There is a ton of info on them.
By neutral I mean they don't depending on movement up or down and either benefit no matter which way it goes or benefits when the underlying stays in a range (depending on the specific strategy).
Which to pick depends alot on broad market. I like being long vol when things start spiking like they are now and short when markets are closer to the mean and calmer.
Ah, I've been browsing this sub for a while and learning, somehow never came across an Iron Condor abbreviated as IC. Thanks for the response, was just curious how you approach it specifically.
I love playing around with Optionstrat and seeing how these strategies work with my thesis'
If I understand you right, you're saying you'd run an Inverse IC/IB, Strangle/Straddle, in the market were in right now
And you would run the exact opposite strategy (short the strategy) when things calm down, options are cheap and you expect continued calm?
Wouldn't you want to be short volatility when things are volatile? Capitalize on people that expect more big moves, hoping things start to settle down. (selling overpriced puts)
I'm going to ask something that I need to learn myself here, in due time, but I'll ask anyway.
When things settle down,, would you ever hedge say, short term strangles, with long term Inverse ICs?
You don't have to answer, aha, just clarifying my own thoughts as well
Yeah you could hedge that way the nice part about options is they create so many different versions to expose yourself to the same thesis. I also really like playing parallel companies for arbitrage during times like now. So let's says we are looking at semiconductors and nvidia has spiked for a reason indepedant from profits I may play AMD or TSM or even Xilinx for their exposure to semiconductors through the expected merger with AMD. This is a good way to play things now because the IV spikes on companies with news can make it a bit tough to get into a favorable position but the sector tends to move together so you get into one whose IV hasn't spiked yet but the movement is somewhat predictable based off how the others have moved.
IC didn't make me think iron condor when I made that comment.
Who hurt you? I get it, you made the wrong move and lost some money, but jfc, pay attention, offer some of that valuable wisdom you hold in such high regard. If youre gonna look down on people, drop some crumbs oh mighty one
Interesting points! Time for me to learn a new strategy. Are you suggesting selling or buying strangles? Much thanks!
Depends on where individual volatility and broad market (VIX) are at. Past couple weeks I have been going long (buying) because the underlying i trade have been moving a ton. In calmer markets I would look at going short them again. I do still sell some but mostly to hedge larger positions. It all really depends on what you are trading though and what positions you are currently in.
Thank you and good luck!
No strategy is 100% foolproof strategy. What I learn from selling puts and if assigned selling calls is you end up losing really really nice stocks with very little profit compare to if you just held them or sometime you become bag holder of crappy stocks
I see what you did there
Known here as the wheel, I believe?
yes, this is the wheel
It’s a wheely effective stwategy !
Thank you for your comment, Elmer Fudd.
So do you sell CSP’s at low prices and CC’s at highs or do you just sell both when IV is high?
So you end up owning the dogs while the winners get away from you 😃. Dumb strategy in this bull run. Much better strats exist to take advantage of volatility.
Bull put spreads are better, defined risk trades. Even when fear is high, and the market is trending downwards not every day is a red candle day. You sell put credit spreads with 50+ DTE, you'll collect rich premiums and that's enough time that the panic will subside. You exit any time that delta, vega and theta work in your favor (sell off ends, VIX decreases, and time passes). You can also dynamically hedge by selling call credit spreads above the market or sell intraday naked calls to lower your max risk.
PMCC on AMD and AAPL, doing really well.
Duh, they’ve been skyrocketing lol
Lots of strangles! Loving this pump in IV!
This for me, 2 SD strangles pricing crazy high.
I sold VXX and other volatility based option calls... currently neck deep in that, at least as per todays market gonna wait for a week to close those positions... looks like the easiest grand I made
Same idea as me, but long vix puts instead. Felt bad I couldn't do it on black Fridays dumpster fire but yesterday gave me another shot and it's worked really well before in Q1 on some volutility spikes.
Short the VIX you other theta cowards!
Take care with those VIX puts - they lose IV when VIX drops and the spreads are not too favorable, so it’s not as easy to make money off of those as you might think.
For those keeping score at home, the puts printed for me.
Wait and see at the moment for me, reduced positions significantly. Only short a few MRNA puts at the moment.
Bear call spreads on IWM twice a week since Nov. 10. I know that’s extremely short term for thetagang, but small caps have been getting wrecked lately.
Is it too late to join this party?
I trade off of charts, and it looks bad, so I think it’s still in play.
After Friday I think you're right. I didn't pull the trigger after the slight bounce near 210 — it looked like it bottomed out at 210-ish a few times this year.
The RSI is at its lowest since the initial covid selloff, so institutions that trade off of that might be coming in soon, barring a broader market meltdown.
Open a PCS on a decent red day (not the -0.25% nonsense) on the SP500. Close at whatever profit target you desire. Rinse and repeat
What’s a PCS?
Put credit spread, u acquire two contracts at once, sell to open let’s say a 10$ strike and buy to open a 9$ strike, the credit of the sell will cover for the buy and then the difference is ur potential profit, try it out and look at the gains chart.
The RBLX yoyo.
Yes, this is a good one.
I tried googling, couldn't find.
Could you please share some link?
I just mean the past week RBLX has been volitile. So when it spikes up in the mornings, I sell some naked calls and usually close out end of day. Rinse and repeat. This is not a recommended strategy.
You couldn't find anything about RBLX?
But this time try harder
How do you scalp successfully?
well if you're anything like me, you watch a stock go down all day. And you keep thinking "not yet... not yet...It's so low, it couldn't possibly go down any more... oh, oh, it's going down more... not yet.... nnnnow!" And then I buy puts at the very bottom, which, no matter how hard I try to learn from my mistakes, always seems like a good decision at the time.
Because you’re just guessing it seems. Why not have some support and resistance levels at least?
Everything follows a trend, until it doesn't.
Every stock has a support level, until it breaks.
We're kind of in uncharted waters here.
These are not uncharted waters this is just a correction. And there are ways to measure volume and price action and use it to your advantage.
Oh really, have you been through many other 13-year-long bull markets? Where the government has printed an absurd amount of money? After a worldwide pandemic? With inflation out of control? And with stock prices correlated more closely to how much their CEO shitposts on Twitter, versus actual fundamentals?
How did it work out during all those other times where this happened?
If you know all that how come you are losing then?
Most honest and realistic answers I've seen here so far
Scalp with debit spreads if you’re scared
Double down by adding a credit spread in the opposite direction.
Yes!!!! The infinite free money box spread glitch!!! /s
Sell low Delta Tesla weekly puts. Great annualized returns, low risk
If you think this is an insane market you have a lot to learn!
Right! This is a fantastic trading market. Makes me wonder if the average age of Reddit posters is under 25.
I get that volatility is good but a market going down 1000 points in a day is it good for csp confidence in my opinion. Maybe I can learn from your genius?
Just wait for big drops to sell puts then
Sorry, my response was to Scottish trader inferring that this is not a “crazy” market in general, not specifically to CSPs. I am far from a genius, but I started trading in 2000, and I definitely know the difference between a couple days of volatility and an actual “crazy” market.
I think when people refer to the market as crazy right now it is because it is (obviously) hyperinflated in valuations and forward view. As many people here only have a basic knowledge of decay positions they are generally running wheels and I think anybody would admit that this would be a scary market to be exposed to pure downside in. When much of the market is expecting some kind of correction (whether just a consolidation, recession, or full blown depression) I feel like now is possibly one of the worst times in recent history to be exposed to purely shares. People need to stop pushing the wheel as the ultimate theta strategy because people never learn how to trade in bear markets. Not quite as bad as WSB, but many people here will be completely wiped out during an extended correction/deleveraging.
There's a lot of new traders here, myself included. I apologize for my lack of experience, but I find your commentary to be helpful.
This is a great point. I use the wheel in a retirement account on stocks I plan to own forever, but how I butter my bread day to day is based off of price action/technical analysis, and selling spreads. The wheel is awesome for long term positioning and in flat/bull markets, but good luck making a living off of it. Unless you have a huge account. Your correct about there being a necessity for new traders to learn different theta/Vega/delta strategies.
You realize there are other strategies instead of just selling puts and wheeling? To be successful, you have to use the vol to your advantage.
Look at a chart of SPY or SPX to see even a minor correction in Mar of 2020, but if you go back to 2008-09 you'll see a much more severe downturn and the market staying down.
The SPX dropped from about 4750 to 4560 this last week which is nothing . . .Then, it is back to 4650 already, again, this is nothing . . .
When trading CSPs 30 to 45 dte these movements up and down means little.
well this is awkward
Yes, I do have a lot to learn which I why I asked the question. Do you actually have a productive answer to help spread your knowledge?
Read a book
There is always a dumb ass comment. Ty
Wheel and LEAPS baby!
I use the standard deviation charts on TOS and sell CSPs on stocks that are trading low on a 6 month chart. This means there's usually less opportune time to sell CSP, so I have a fairly large watch list of S&P 500 companies that have weeklys, good IV, and are <$10.
Also LEAPS on blue chips and SPY. I roll every time DTE hits 200 days. Even if there's a crash tomorrow, historically this gives me the same risk as owning good companies long term with higher returns (higher losses too if I have to roll at a loss, but historically the profits more than make up for this). Also selling PMCCs on these if they're trading high on a 6 month chart.
And just straight up keeping some $ on the sidelines. If shit hits the fan Im buying LEAPS on SPY, APPL, AMD, HD, MSFT, and WM at super low prices
I like yo style 🍾🍾🥂🥂
Long Puts on the VIX over 20 you cowards!
Can you elaborate on this?
Technically, I meant that when the vix spikes to 20, 25 or beyond I like to short the VIX with puts.
The puts printed. I BOT at around the 27 strike when that was somewhat ITM - date was end of Dec. SO, I had a few weeks to be right. VIX swung down putting me farther ITM for a day or two, but then my puts got slashed in half when VIX went well over 30. Then VIX came back to earth. Today closed under 20.
I closed out my puts for a tidy gain. Actually took most of the original position off and rolled the rest to an ATM Jan dated position, so not out of the woods yet, but 80% of my original cash is off the table.
Not financial advice. And a warning, VIX rallys beget VIX rallys. Hard to judge how high it will rise when it's climbing. I like to be sure I'm comfortable doubling down at a vix of 30, 40, and (God help us all when it happens again) 50 and beyond.
I'm holding what I have, but I have a hard time adding new positions - the market feels too toppy.
Been selling Put Credit spreads on SPY about 3% OTM and have been successful lately.
Selling cc's. If the share prices drop I'm no worse off than if I'd sold puts. But there's the potential to capture upside movement as well.
While I don't own anything I want to get rid of, I also don't mind getting assigned at max profit, and I know that's not everyone's strategy.
What’s your annual ROI and/or alpha over SPY?
For my wheel portfolio this year, about 33%. It's a combination of fortuitous timing on higher IV stocks (been in and out RIOT and MARA all year), and selling weeklies on flatter ones (mostly BB). I was closer to 40% but some of my holdings took a hit in the last two weeks.
I'm hardly an expert so don't ask for advice. I could've just bought SPY a year ago and had pretty much the same return with a lot less heartburn, who would've guessed...but that's no fun.
Before entering any trade, be sure to strangle your iron condor. Keeps your mind clear.
I like straddling the jade lizard too. Really clears the mind
Selling AMC, RIOT calls and puts when the timing is right.
Deep ITM SPY LEAPs (345C 12/16/2022) PMCCs for the time being
Take profit same day and sleep like a baby!
If you have been appropriately sizing your positions when you opened them, this should not change anything. If you’re leveraged to the tits then consider closing some and taking some losses. We all lose at some point, the key is don’t go out of business so you can still be here when things recover.
I’m at 50% capital right now, so I’m gonna sit tight and not do anything unless my stocks are down at least 50% from 60D high. Then I’ll evaluate whether I wanna DCA at that point. Unless there is a fundamental change in the company, I don’t care much about broad market selloffs like this.
I am mostly fine with taking losses. Just pissed off that I have to give up so much gains for the year.
I'm looking into MSFT and NVDA leaps for PMCC : 1/20/2023 \~300C for both. It looks like it should generate 400/week in CC premium which is great. It will cover the cost of the leaps if things take a turn for the worse.
Here's to hoping they both hit 380+ by the end of 2022!
I’m adding more shares per my usual monthly investment schedule. Everything is on sale!
Diagonal Calendar Call Spreads on mega cap tech stocks been going alright
Bag holding stock and leaps and waiting for them to go back up so I can sell CCs against them.
I'm going to get downvoted but I don't think Theta is a winning strategy. Imo, it only works in a few instances where you're looking to buy a stock (that's been beaten down) and use the premium received as a sweetener. Also, selling covered calls on stocks you already on is a good strategy in controlled circumstances such as a sudden increase in IV.
But entering into an Iron Condor or spreads into stocks that you don't like nor have capital to own outright just because it's a "play" just doesn't work enough. Might as well park that money in an index fund.
But that's me. Again, in controlled circumstances.
Theta is an income strategy not a return maximizing strategy. If you want to current income against non income producing assets or want to reduce your entry costs. That’s it. It’s not for everyone and it’s not for your entire portfolio.
Sell naked puts, stocks only go up!!!1!
Buy the fucking dip! Amazing companies are super cheap rn buy buy buy
Selling CSPs on a downturn isn't the worst idea in the world, although you might want to wait for the market to settle, or see if the knife has any further to fall, first,
If you do happened to get assigned, just sell calls against your shares above your break even point (if possible for any meaningful amount of premium). Otherwise, just hodl, and wait for a rebound first.
Sold 80 dollar puts on rivian when it dropped down to 100 a week back and collected 10.45 avg on a contract expiring in march 2022 . Up 40% this morning before the crash . Holding till 60 to 70 percent profit .
That was brilliant!
Long condor on the SPX weeklies, 1 DTE. Put the trade on after 3:30 EST. This is just to play the gap up / down when the market opens the next day. Leg out of it as needed. This is with fun money, and generally only do it in an insane market. Holding all my other positions and selling covered calls when the premium is worth the risk. May use that premium to purchase protective puts on the positions I want to own long term.
CSP on a bunch of stuff that hit new 52 week lows Monday/Tuesday.
50k collateral total
Selling strangles on /ES and using the premium to buy shares of SPY 😂
90dte short puts
Short strangles, Visa, for example, has an IV percentile of 74% so I opened a 16 delta strangle expiring Jan 21st for ~4.00 credit. Will sell at 50% when IV contracts.
Selling 30 to 35 delta single option puts and single option calls to take advantage of quick movements in the market. Meanwhile, most of my strangles are getting tested.
While Vicks is under 20 I am only using about one-third of my buying power. Once it gets to these levels I am using about 40%.
CSP on 75%
Cc on 20%
Long call on 2%
Remainder in cash to jump on SPY calls when dips hard
If u got 6k sell 1 put contract in UCO $60 strike price with a week expiration. Will collect decent premium. If u get assigned just wait for the rebound in crude oil
Short strangles and naked puts have been working well for me. I like to keep my option selections under 15 delta if possible.
waiting with cash
Buy puts though it’s probably too late now
I always have cash available on the side to scoop up discounted stocks when they dive and prefer the dividend payers .... pretty much like 032020 and 2008 and since 1995
Wait for UVXY to spike then sell call credit spreads on it 45 DTE. Been pretty juicy strategy all year actually. Even without major spikes, the thing decays like a rotting corpse in a river. 😋
Position = cash
Long Iron Butterflys/Straddles have surprisingly worked on most earnings recently. There haven't been earnings where the stock hasn't blown past its expected move.
Cash is a position
My strategy is for SPY to go back up ...
... and to make 1000 dollars per day.
I'm a very delta-neutral trader, but I have been hedging my standard positive theta, negative Vega strategies with positive theta, positive Vega positions with short DTE as we move downward (i.e. calendars and diagonals). So far it has been very successful
>What is everyone doing?
Not selling puts. The people who say "selling puts as usual" think always being long is what you're supposed to do, or that it's respectable/noble. They're thinking like investors rather than traders. Imagine being blindly bullish in one of the greatest asset bubbles the market has ever seen, with margin debt at an all time high, and shortly before the Fed is hinting to make major policy changes
If you're a trader there's a time to go long and a time to go short. This week has not been a time to go long. That's not a hindsight is 20/20 thing either. Last Friday was the clue. There's nothing wrong with sitting out a few days while the market is dealing with big volatility events to the downside.
Or better yet, take on some short delta and make money from the market falling. That's what traders do -- play both sides of the market. It's not hard and it's not scary. People just don't know how to do it, so they continue selling puts (and acting like it's superior) even while SPY is free falling 3% from its daily high. Not good
high probability & annualized ROC% vertical spreads and calendar spreads to take advantage of high IV
Wide strangles on EWZ, CCL, LVS, and sold a naked put on wed at the close on AAL, took a 22% profit for selling the 27 delta, and took that risk off today. Manage your buying power and ride it out like a Chad. My IWM condor in $6 in the money, nothing I can do there, just ride that guy out, and don’t flip the fuck out. This is why you sell high IVR stocks, 17/21 delta range, and understand buying power expansion in naked options so you can defend
At this point everyone is bleeding. But don’t get slaughtered. Put some gloves on and defend your trades if you sold naked options. I have a small account so i also don’t trade too big. Largest stock i trade is a $35 stock in about a 5-7k acc
I am closing positions to raise cash.
I've just been consolidating my portfolio into my highest conviction holding recently. I'll sell a call when it's green, but that's rare at the moment so I've been able to buy to close pretty quickly. I've had some married puts open as insurance that I rolled to both take some profits and buy more hedged time. If tomorrow happens to have some green, I plan on selling some calls and buying some puts. Rinse and repeat this process until there's less whipsawing while buying shares with the collected premium and any gains from the sort of scalping of short/long options.
I've also tried to take advantage of this volatility a little bit by selling some put credit spreads, but they have some time on them and are mostly wholly OTM to be safer. Might turn some into iron condors if we start seeing some more consistent green in the indices.
Lol the market has a few whipsaw days and all a sudden it’s insane? Good grief.
There is a lot of uncertainty in the market. Covid and the Fed. I’m glad you are confident and not worried about any csps you might have. I’ve only been doing options since last February. I was simply asking a question.