Not to pick on you, but I’m wondering if you might be questioning your CC closes
yesterday vs
today. I did something similar, and have now realized how much I left on the table. If we do close below $650, of course not a certainty, then there would be $9 unrealized on those c650s. In any case, there was another $4-$5 loss overnight that was unrealized. Furthermore, the premium difference between yesterday and today for next weeks c700s is only ~$0.30. Again, not a nitpick, just trying to learn something from everyone and your conservative trades and situation are more similar to mine. What I’ve learned from your trade, it’s now obvious that 2x more profit came from the lower, riskier 650CC than the 680CC. These buy-writes instead of puts are definitely something to consider. Thanks.
FWIW, there must’ve been a large IV drop after the FOMC meeting (which we should all have known was coming). All my puts and calls are down significantly. Similarly, the 7/8 +800c that I bought at a $20 lower SP is now 15% lower than what I paid (near yesterday’s low SP).
With all the cathartic posts of late, I decided to look back as well. My portfolio is down 35% since the Nov 4th ATH, which should probably be viewed as a positive. Since then TSLA is down 50% and the S&P 20%. Most of my trades have been CCs and CSPs, with a few sporadic call purchases thrown in, all within my IRAs. These are the largest paper losses that I’ve ever experienced and it does sting. However, since investing in TSLA these are also the largest paper gains I’ve ever seen. For now, I too have put off large life decisions and purchases. I have doubled down on food gardening to feed my family and neighbors so that we can all enjoy the better things in life. Peace and better times to everyone. P.S. If anyone needs fresh tomatoes this summer…….
Interesting questions.
Regarding the closes yesterday vs. today, not questioning them in the least. Then again once I make a trade the only question I ask myself later is whether there was something I knew, when I made the trade, that I would use in the future to make the trade differently. Its more of a process thing for me, rather than optimizing an individual trade.
In that context, yesterday's closes ticked off all my boxes for an early close:
- high % gain (not much of a motivator, but it does help to know how much is left to earn)
- high absolute gain. More of a motivator
- big drop in the share price (close cc's on down days)
- closing early also enables an open on the next up day that is frequently the next day (never open a replacement position on a day where a position is closed)
- in this case, since the uptick rule got triggered, today being flat to up was nearly guaranteed in my mind. At the least a big down day wasn't in the offing.
I also used market orders for all of those opens and closes - once I've decided I like the new position (opening or closing), I just do it and don't sweat the pennies. The market orders frequently get me the mid point, and that is plenty good for me. I've explained the logic elsewhere.
Anyway - by closing yesterday at really high % gains I had no overnight thought or worry about today. I expected an up day - I was hoping for a bigger move up today. The only reason for the expectation was the big move down plus the fact it reached 10% / triggered the uptick rule. Little or no stomach acid is a biggie for me, and I'm finding the buy-writes to work REALLY REALLY well for me in this regard.
On a bigger move up I would have been able to open an even better strike and/or premium. And the $7.50ish open is a great position for me. If I close at 2/3rds then that'll be a $5 realized result for next week. And the 700 strike, even if it gets overrun, means I'll take a $20 loss when I sell the shares. I'll have collected north of $70 over the 4 weeks for a net $50 plus the $7 - $57 over 4 weeks makes for some excellent dividend like result action.
Oh - and I was closing 650s and 680s - now I have 700s (lots better strike) for next week.
In summary - for dividend like income this week has worked out great. Next week is lined up to be great, and as this is cash I would otherwise be using to sell cash secured puts, I'm not nearly as attached to the shares as I would otherwise be. If we go to 700ish next week then I'd probably roll to $10 or $20 OTM but if we get to 750 or 800ish then I just well the shares when I close the cc's and am excited about the net result ($20 share loss, $70+ premiums). And I'll even be happy having that cash again
If somehow we drifted up week to week then I'd have the best of all worlds - a steadily improving cc strike as well as big weekly credits.
More likely we'll have a sharp move up that will push time value close to 0 - I'll use that as an early close opportunity, watch the share price drop the next day, and start a new buy-write.
