The Black swan known as "Hertz week" came 4 weeks after I started doing $50 BPS, and the week after I decided to start BCS to form an IC. So that was painful. But now with way OTM, $200 spreads I'm not worried about the 1-2% ROIC, because another loss is extremely unlikely. It will be interesting to see if you continue the more aggressive strategy that has regular losses compared to my slow and steady strategy after a year. If there was a real black swan like Elon dying, I would immediately close the sold leg, and let the purchased leg (which was worth almost nothing to buy with a $200 spread), just build value if the stock kept dropping. So while a $200 spread has higher theoretical max loss for a low ROIC, it rarely would come into play, even with a black swan event.No, but what if the black swan is the week you started this strategy? And would you rather spend 4 weeks building back your reserves or 22? (well, 2 weeks or 6-11, in the more likely scenarios were you close early)
Example 25% ROIC trade (I used to report these, but they're directly counter to most of the not-advice here and I put a lot of these on) placed this morning:
11/12 BPS 20x 1120/1105 @ $3.26. This is about 6.5k max gain, 23.5k max loss or 27% ROIC. At the time I sold this, it looked like 1150 was a support and high IV let me get what I considered to be a very good chance at 27% ROIC. If I need to close this early, it will probably be for a reasonable loss, but my only real management strategy is BTC.
Right now a lot of the trades I put on Friday are underwater, but I'm still thinking that we close the week close to 1200 (or at least visit), barring some macro event, and my ICs and trades from this morning are making up the losses.
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