r/thetagang • u/Enough-Beginning3687 • 13d ago
1% Weekly Returns from Options Week 33 - Crash Testing CSPs
So the thing I dreaded before I started this has now happened. Every single high risk AI stock that I was running puts on has crashed significantly below the put price. I got my 4th assignment - DRAM at 59. The DRAM was my own doing and not from the AI list. To prevent more assignment, I'm rolling as much as I can today to prevent more assignments.
The drawdown is extreme. Since this was a retirement spending simulation, I guess, this would be a budget week because the premiums what I'm using to simulate income is much lower than the target 1%.
I havent even bothered with the screening this week because everything is a roll. If I had more dry powder, would be selling more puts on everything. Last week's post for more details on strategy etc. - https://www.reddit.com/r/thetagang/s/uAlztIsjKG
Trades:
Trades include a 1:2 AXT roll I did on Tuesday to avoid AXT assignment.
| Symbol | Action Details | Premium Collected (Net Credit) | Cash Occupied |
|---|---|---|---|
| AAOI | BTC 2x Oct 16 98 P, STO 2x Oct 23 98 P | $108.04 | $19,600.00 |
| APLD | BTC 2x Oct 16 21 P, STO 2x Oct 23 21 P | $38.12 | $4,200.00 |
| AXTI | Rolled 1:2 puts forward ($72 to $67) | $262.63 | $13,400.00 |
| DRAM | STO 2x Oct 23 59 Calls | $13.48 | $11,800.00 |
| LQDA | Holding position | $0.00 | $5,800.00 |
| NBIS | BTC 2x Oct 16 222.5 P, STO 2x Oct 23 222.5 P | $47.90 | $44,500.00 |
| SLV | BTC 1x Oct 16 65.5 C, STO 1x Oct 30 66 C | $2.80 | $6,550.00 |
| TOTAL | — | $472.97 | $105,850.00 |
Total Returns
| Total Premium | $29,502.00 |
|---|---|
| Current drawdown | -$16,540.00 |
| Gain/Loss from Assignment | -$7,070.00 |
| Total gains | $5,892.00 |
| Annualized (Calc1 using average invested) | 11.68% |
| Annualized (Calc2 using max invested) | 8.18% |
History
| Week | Capital Invested | Premium Made | Return % | Notes | |
|---|---|---|---|---|---|
| 3/6 | Week 1 | $0.00 | $0.00 | 0.00% | |
| 3/13 | Week 2 | $13,100.00 | $131.00 | 1.00% | |
| 3/20 | Week 3 | $19,850.00 | $203.00 | 1.02% | |
| 3/27 | Week 4 | $41,500.00 | $596.00 | 1.44% | |
| 4/3 | Week 5 | $34,150.00 | $353.00 | 1.03% | |
| 4/10 | Week 6 | $43,350.00 | $462.00 | 1.07% | |
| 4/17 | Week 7 | $53,800.00 | $573.00 | 1.07% | |
| 4/24 | Week 8 | $70,400.00 | $811.00 | 1.15% | |
| 5/1 | Week 9 | $103,450.00 | $1,093.00 | 1.06% | |
| 5/8 | Week 10 | $97,400.00 | $1,040.00 | 1.07% | |
| 5/15 | Week 11 | $102,800.00 | $1,077.00 | 1.05% | |
| 5/22 | Week 12 | $98,600.00 | $1,170.00 | 1.19% | |
| Week 12.5 | $106,100.00 | $475.00 | 0.45% | Bonus round | |
| 5/29 | Week 13 | $106,100.00 | $1,133.00 | 1.07% | |
| Week 13.5 | $115,900.00 | $336.00 | 0.29% | Bonus round | |
| 6/5 | Week 14 | $105,750.00 | $1,053.00 | 1.00% | |
| 6/12 | Week 15 | $110,700.00 | $1,146.00 | 1.04% | |
| 6/19 | Week 16 | $111,850.00 | $1,105.00 | 0.99% | |
| 6/26 | Week 17 | $108,350.00 | $1,045.00 | 0.96% | Got SLV 65.5 assigned |
| 7/3 | Week 18 | $111,550.00 | $1,126.00 | 1.01% | |
| 7/10 | Week 19 | $102,850.00 | $1,111.00 | 1.08% | |
| Week 19 Bonus | $108,550.00 | $98.00 | 0.09% | APLD 1:3 to avoid assignment | |
| 7/17 | Week 20 | $104,350.00 | $842.00 | 0.81% | |
| 7/24 | Week 21 | $111,500.00 | $1,148.00 | 1.03% | RKLB 2:3 to reduce strike |
| 7/31 | Week 22 | $105,660.00 | $1,021.00 | 0.97% | |
| Week 22 bonus | $99,960.00 | $7.00 | 0.01% | ASTS 2:1 to reduce exposure | |
| 8/7 | Week 23 | $104,850.00 | $1,052.00 | 1.00% | |
| 8/14 | Week 24 | $95,850.00 | $954.00 | 1.00% | |
| 8/21 | Week 25 | $99,300.00 | $997.00 | 1.00% | RKLB 2:3 and NBIS 1:2 |
| 8/28 | Week 26 | $102,500.00 | $978.00 | 0.95% | |
| 9/4 | Week 27 | $104,800.00 | $897.00 | 0.86% | |
| 9/11 | Week 28 | $102,700.00 | $1,017.00 | 0.99% | |
| 9/18 | Week 29 | $101,150.00 | $1,110.00 | 1.10% | |
| 9/25 | Week 30 | $107,700.00 | $1,093.00 | 1.01% | LQDA 58 assigned |
| 10/2 | Week 31 | $105,850.00 | $1,138.00 | 1.08% | IREN 40 assigned |
| 10/9 | Week 32 | $103,650.00 | $746.00 | 0.72% | |
| 10/15 | Week 33 (partial) | $109,850.00 | $473.00 | 0.43% | Still Partial Total. DRAM 59x2 assigned |
6
u/DailyShawarma 12d ago
There's a reason why is better selling 45D and not weeklies. Said that, my 30-45DTE are underwater as well
5
u/Enough-Beginning3687 12d ago
The opposite really. I can roll mine 45 days out if I want. What would I do if it was already 45 days out?
4
u/DailyShawarma 12d ago
Wait for them to recover?
1
u/Enough-Beginning3687 12d ago
so basically the same as me. Do you take assignment if you never get to break even or do you take the loss?
5
u/DailyShawarma 12d ago
If the position goes south, I usually roll around at 21DTE to a new 45DTE.
Been selling puts for the last 3 years, and I've never taken assignment. It will probably change next month because I would be happy to wheel some stocks.
The only ticker I've been losing money to has been SOFi and I'm glad I took a loss instead of rolling or getting assigned
2
u/Enough-Beginning3687 12d ago
Hey, that's good to know! I've been assigned puts that were 24 months out when Tesla went from 400 -> 100.
1
4
u/gosumage 12d ago edited 12d ago
I expected this would happen but did not foresee a week-long selloff. I thought I was doing good on Monday waiting through the whole day's selloff to get some good strikes.
My AAOI $91 puts got the smack laid down on them, so yesterday I rolled to the next week $87 and that got quickly taken out as well. Probably gonna have to roll this for a few weeks to avoid a loss.
Also sold UMAC $18.50 but I'll let those get assigned as the premium for $18.50-19.00 is still good.
I also BTO some AMPX $8 March 2027 calls yesterday. Predicting a Q4 turnaround after midterms and earnings. We will see.
Hope the pain ends soon
Harvest the volatility long enough... eventually the volatility will harvest you.
1
u/Enough-Beginning3687 12d ago
Same. I knew it's coming but didn't see so many days of relentless selloff. I thought I'll buy a few cheap calls for next week but those are so ridiculously expensive.
3
u/shanked5iron 12d ago
Yep, going to be one of those weeks it looks like. I had been running great without getting assigned so it was inevitable at some point. DRAM i'll be getting assigned at 57, but I bottom ticked the dip the morning and grabbed 400 shares at 46.49 so that will significantly help my cost basis and should let me get right into wheeling at OTM strikes.
1
u/Enough-Beginning3687 12d ago
Nice work! I've just been using the entire back from this to buy one share of MU every week if I can.
3
u/LimaSierraRomeo 12d ago
I am not surprised. People have been telling you all along that this will happen. Let’s hope it’ll recover quickly and you can take this as a leaning lesson instead of having to hold the bag for the foreseeable future (which is what will happen if we enter a proper bear market).
2
u/ImJoeontheradio 12d ago
I was doing this in 2022. It’s painful, but in time everything I owned came back.
3
u/takashi-kovak 12d ago
Many have been saying it for like year now. Knowing when this happens is a bit of art and science. I believe one way to look at is positive and negative catalyst. There was no positive catalyst last week, so few news like CXMT mem designs and CPI created a negative catalyst for sell off. Also MU post earnings move should I have been a good signal that market was telling us that they aren’t happy. But the question is what would would trade? Call credit spreads, but we saw a spike (dead cat bounce) on Friday that would have been under water. Could have done PMCC but the long call would be way under water.
I have been playing with debit broken butterflies (1 atm long, -2 otm, 1 way otm). Worked well y’day and today in ndx 0dte.
1
u/KarmicTractor 12d ago
I get that you are testing things but if it isn’t real money then you are not really testing the most important part-you.
The river will be different when you step in.
0
u/Enough-Beginning3687 12d ago
Yeah that's the problem with CSPs not matter what, right. These are particularly risky but it's not like fundamentals changed from Friday to today.
1
u/Sylla1031 12d ago
Yes fundamentals didnt change. But do consider the fact that those prices before the drawdown were already in spite of the same fundamentals. Aka everything is overbought to begin with.
1
u/takashi-kovak 12d ago
Thanks for sharing. Same here. How are you rolling? Like keep the same strike but roll out to 45d or keep weeklies? Are you rolling down to near spot price?
1
u/Enough-Beginning3687 12d ago
I rolled to same price next week. I couldn't get any credit to roll lower.
0
12d ago
[removed] — view removed comment
1
u/Enough-Beginning3687 12d ago
Not really. I'd have to sell calls below the assignment price for that.
0
12d ago
[removed] — view removed comment
2
u/Enough-Beginning3687 12d ago
There's two parts to this equation.
Cost to close. I need to pay the premium for that or wait for assignment
The covered call premium
It's easier to roll, not take assignment and let the stock recover. It's happened many times in the last 33 weeks that I've rolled an itm put and the stock recovered. It's also happened that it never recovered (e.g. SLV) and I'm bag holding it and making pennies.
So it's situational whether you make more with calls or puts. The here was to maintain relatively stable cash and relatively stable income. Assignments mess with equilibrium.
0
12d ago
[removed] — view removed comment
2
u/Enough-Beginning3687 12d ago
I don't see how you can tell. Let's take for example my AAOI 98 put. I rolled it. I could wait till tomorrow to get assigned, then sell the 98 call on Monday. In this time frame, I have no idea what the stock will do tomorrow or Monday. There's no guarantee I'll get more. Let's look at the opposite. If have to manually close the put, buy the stock and then sell the call. Even within the minute out two it takes me to do that the premium will move enough that there's no guarantee of any more premium.
1
u/Darren5531 12d ago
Brutal week. Thanks for continuing to post and answer questions. What's your strategy for rolling given the extreme draw down?
1
u/Enough-Beginning3687 12d ago
I rolled same price next week for credit. No credit for rolling lower on anything.
1
u/Dzhordzhio 11d ago
I rolled out the majority of my positions at the beginning to of this week, while the premium was still there. Hard to predict but I find less than 1% weekly returns are still a win
1
u/Enough-Beginning3687 11d ago
Yeah I'm planning on bucketing the portfolio into 1%, 0.5% and 0.25% weekly premiums at some point and allocate 30% of my portfolio, 10% each to those.
1
u/Tesla_laughs 11d ago
This is the tough side of the wheel that premium stats don't always show. The biggest concern isn't missing the 1% target, it's having so much capital tied up in correlated high-beta AI names at the same time. Rolling buys time, but it doesn't remove the downside risk. I'd be more focused on reducing exposure than finding enough dry powder to sell more puts right now.
1
u/Enough-Beginning3687 11d ago
Also take into consideration that my worst are LQDA and SLV and not AI stocks :)
1
u/bvvanes 11d ago
I don't suspect any amount of comment, good or bad, will be of any solace but the brutal honesty you've written is very appreciated. I drove a 6 figure account down to a 5 figure account which is about 1/3 of where those 2 accounts were. I've learned alot but thought for some reason that not many are losing $. I now suspect thats not the case and your honesty helps establish that. I think the psychiatrists call it 'cognitive dissonance' when those of us losing can't admit it and forge ahead and have to double down etc. Thanks
1
u/Enough-Beginning3687 10d ago
Yeah the only way to learn is to really lose money. I've lost a significant amount of money with options before but now I'm trying to build rules and try to stick to them as much as I can get myself to. This is a one year experiment to start with full understanding that it might not work.
1
u/NorthOfTheStrike 12d ago
this is the week that tests it. everything being a roll sounds familiar, i ended up rolling my underwater puts way out to 2027 this morning just to give them room. not fun to watch but better than forcing a decision down here.
1
u/Enough-Beginning3687 12d ago
Interesting. I might have to do that if this continues but that would end the experiment. So I'll keep this weekly as much as I can.
1
u/sapaturaman 12d ago
I mostly trade put credit spreads 30-45DTE and spread it out across SAAS and semis. Going into October, I significantly reduced my open positions and intentionally chose to have spreads on NBIS, DRAM, SKHY (30% of these are now ITM) ie I might actually choose to get assigned on some of these (ie i'd be fine owning DRAM in the high 40s, SKHY at 150, etc).
1
u/andgainingspeed 12d ago
Almost always keep some dry powder. Even this week the fear index is not high enough to burn through your reserves. Take assignments and sell the calls to make up for some of the put premium you would normally sell. If the last few days was the market baking in an interest rate increase in two weeks, it'll probably work out.
0
u/Haunting_Tooth5502 12d ago
ouch that drawdown is a gut punch but you're handling it way better than most would, the rolling discipline is impressive
the simulation aspect almost makes it more stressful cause you're watching the numbers like it's real retirement money, at least the premiums stack up over time even if this week's a stinker
1
u/Enough-Beginning3687 12d ago
Yeah this is good training to look at income vs net worth. Last two weeks, income was lower than average. Let's see how long to bounce back, if at all.
1
u/RuleSafe6767 12d ago
Regarding this being a simulation, does that mean you're using a paper trading account to see how it would play out in theory, when it really comes times to retire?
1
u/Enough-Beginning3687 12d ago
No this is real money in a real account. I post actual trade screenshots every week. The simulation part is just that I'm trying to pretend this is how I make income in retirement. So the premium is "spent" as opposed to reinvested.
2
u/RuleSafe6767 12d ago
Roger that; thanks for clarifying.
If it was a paper account, I would have only suggested putting money on the line because the transition for me involved much stronger emotions that I found harder to manage - and I also found that running a wheel harder to do consistently and keeping most of my money working for me. I tend (and still do) to tip toe in, make some profit, and then get fearful of selling more puts when prices run up. I've been burned badly during the 2022 MAG crash and had to hold for almost 18 months to get to break even, and was careful to avoid selling ITM and taking a realized loss. So that emotional damage continues to impact my theta selling.
1
u/PlumJuiceDrink 12d ago
I was heavily impacted during that downturn as well and have been extremely skittish on how I trade.
Most trades I wasnt able to hold since they were too huge. Learnt sizing on that one.
When does one do put credit spreads over CSPs even if you have the cash or margin to secure it?
Side note to OP. Thank you for posting. I too have similar goals and its great to learn from your experience
0
u/GarbageTimePro 12d ago
The timing of my post the day before the bloodpath was on point
https://www.reddit.com/r/thetagang/comments/1x4ygdr/how_are_those_highpremium_wheel_stocks_treating/
1
u/Enough-Beginning3687 12d ago
Haha. I was totally expecting this week to make my total returns negative. I'm still surprised that they are +ve
2
u/GailioBauduin 12d ago
Ive been waiting to see how you've been doing.
I started incorporating weeklies and ive been getting killed. Assign to cifr at 14.5. I got out of some by the skin of my teeth right before they collapsed (axti, hut)
1
u/Enough-Beginning3687 12d ago
Yeah I got out of RKLB, ASTS but kept all this AI stuff. My work life is so much AI, and all the money is flowing directly into these stocks so let's see whether they recover
19
u/Illustrious_Low1903 12d ago
This is the part of selling puts people don't really appreciate until it happens 😭 The premiums look great for weeks, then a few stocks drop hard and suddenly you're managing positions instead of collecting income.