u/himanbansal

TLDR: For the past year I experimented with a "time in the market" style selling out of the money weeklies consistently. I made $72,000 using an average of $95,000 per week in a year. But i had $250,000 set aside for this strategy so its really like a 29% yield. 

I wasn't able to display how some stocks that were no longer used for weeklies turned out after retraces so this doesn't show the full picture for the portfolio, but the income is accurate.

_

The past year was mostly bullish, but there were neutral and bearish weeks and months.

Unfortunately we never really got a full on bear, like 2022 type bear, so thats inconclusive. But I'm pretty sure all investing will suck in that type of down market unless you buy puts, short, or go all cash. But buying puts, shorting, or staying cash sucks in anything except a bear market, so its a tough balance.

I went more for the "time in the market" approach rather than waiting for dips. Typically I'll just sell something on a friday that expires the next friday. If an opportunity did present itself on thursdays or mondays I would try to time the market, but that was less often.

Mostly I was putting a lot of pressure on myself to have something open every week, and I don't think the time in the market approach is ideal for this. Mostly because the losses hit harder than the gains, so if you have some sort of intuition or innate ability, and good patience to time the dips, I think that will lead to more favorable outcomes.

Lastly, some people might disagree with my use of the term "lottos". I was trying to make reasonable salary type income so I wasn't going as far out of the money as some would consider real lottos. But I think anything otm has a low chance of being hit so its still favorable for the seller.

_

Totals

For the full year I made a little bit over $72,000. In the first half, which was completely bull market, I made $39,000 using an average of $150,000 collateral per week.

The second half was actually neutral bearish up until the last 2 months, I was on pace to get even worse yield than the first half. But then the market reversed and I jumped into a stock that was going parabolic. Almost 90% of my second half income was made in the last 8 weeks.

I used a lot more of my available collateral in the first half, with 4 of the weeks using more than $200,000. But in the second half I chilled out and used an average of less than 25% of my total available funds.

_

Averages

The first half I made more money, but in the second half I had a much higher yield. But again its mostly because of MU pumping the last 2 months than got me there so I believe the second half results are skewed and unrealistic.

Kind of same thing as the totals, the second half had a much higher estimated annual percentage yield, while the first half had a higher annualized dollar amount.

Not including loss weeks, there were 19 weeks where I made less than 1% yield. I also made more than 2% yield for 13 weeks (11 of those weeks were covered calls getting assigned).

9 weeks I did go down in total account value from shares going lower and exceeding the premium received from covered calls, and out of those there were 4 weeks I accounted as lost money from cash secured puts getting assigned lower than my breakeven.

_

Fun Metrics

These are all stats I made up and aren't widely used industry standards. They are just fun for me to look at.

ProfitsFromProfits: This is just taking the total income and multiplying it by my average yield. Right now I can possibly make a little more than $1000 per week using only the profits I have already made. Although it might seem unrealistic, I think having 52 data points makes it more feasible.

SalaryFromProfits: Multiplying profitsfromprofits by 52 weeks it shows I can expect to make almost $55,000 in a year just by continuing with only the profits I've already made. Even getting half of this by reducing risk and going further otm with stable index funds would be really good for me.

DollarsPerHour: Assuming a 40 hour "work week" this is how much I would be making hourly if this was a normal job. This one is important to me because its the only metric that is weighed against a flat amount of time. I think making $35 per hour is pretty respectable for a filthy lotto seller.

WeeksUntil2x: This shows how many more weeks it will take for my total income to equal my average risk. At that point I would consider it a "house money" account. At my current rate I should get there in 4-5 months.

_

Ratios and Assignments

For the full year I had 19 out of 108 unique options get assigned. 14 of 47 calls, and only 5 out of 61 puts. 

Getting almost 1/3rd of my calls assigned is probably the most revealing statistic. Its very clear this whole year was a bull market from that alone, and a big chunk of my profits came from selling shares at a way higher price than I bought them just a week before. 

I usually sold calls around 10-20% out of the money so getting that many calls assigned within 5-7 days is pretty wild in my opinion. I was expecting the assignment rate for calls to be similar to the puts.

The first half my call put ratio was pretty even, but in the second half I sold way more puts, mainly because I didn't want to buy shares outright as often.

I also only allowed 1 contract to expire worthless this whole time. I think its better to buy to close and have the ability to use that collateral for the next week immediately rather than having to wait over the weekend.  I also think its not worth holding an option thats already down 80-95% for a tiny bit more gain, when you can go to the next one and get more premium.

(PS that one contract I let expire worthless was a covered call as the put leg of a covered strangle was getting assigned)

_

Flaws

There are some issues with my reporting that I'll be fixing with my next series. The main one is I didn't have a good system to show whats going on with my shares if they aren't being used for weeklies.

For example the 400 TTWO shares that I bought for the purpose of selling weeklies on all the way back in January just started to recover, but I've had to resort to selling 3 month covered calls on them since then.

I tried to show a "roster" in previous posts but it really wasn't a good way to display the shares and their status. So I'll be trying for a total portfolio type of update which shows the full picture rather than just the income gained from selling options.

_

Retraces suck

I'm talking about big retraces, like 20-30% or more. Corrections are really bad for this strategy because you are only getting pieces on the way up, but you take the full hit on the way down. So if you are continuously buying higher your cost average continues going up. Then one big downturn will take all your little gains, and if it doesn't bounce then you are stuck.

I had many stocks that retraced from their highs and never came back. NFLX, HOOD, META, RDDT, and IBIT were a few of my stocks I was using for weeklies that retraced and stayed down. I still had a positive return on them, but most of my profits evaporated before I closed those positions.

The TTWO was my worst retrace. At one point I was up $60,000 from trading and writing options, and when it went from 260 to 190 in February I lost that entire gain and was even negative for a few days. 9 months of consistent gains just evaporated in 2-3 weeks, absolutely brutal. Thats why I took a 4 week break in the second half where I didn't trade at all. I'm back to up $30,000 profits on it now after it recovered back to 240 recently.

More of my picks corrected down from their peaks than my stocks that stayed high or continued appreciating, and in the end my weekly lotto selling mostly just saved my ass and I didn't even beat SPY. I'll blame my bad picks and not the strategy itself.

_

Closing Statements

Weeklies ended up being better than I expected so I will continue with just the total income I made, but I'll take the pressure off by trying to time the dips better instead of always having a contract open.

I'll also just continue this with mostly index funds instead of trying to find individual stocks that may or may not beat QQQ or SPY. To me its not worth it trying to find stocks that can go up 200% or down 50% when the total market funds are doing so well. I have mostly individual stocks right now and am slowly transitioning to a goal of mostly index funds.

Let me know if you have any questions and I'll try to answer them the best I can. 

Thats it for me. Thanks for reading and good luck in your writing derivative contract adventures.

_

Disclaimers

I'm really sorry but I have to add these in here. These apply to all of my weekly lotto posts.

1. All my positions are covered with cash and shares. I don't use margin.

2. I am mostly ok with buying and selling the shares if assigned. Sometimes it hurts my feelings for like 5 minutes though.

3. This is a small portion of my account experimenting with weeklies.

4. I don't have a degree in finance or work in the investment field. Just a normal dude that learned about this sharing my choices and results.

5. And I know its unpopular to say this here, but I don't consider this free money. All investing carries the risk of losses which is why we get paid such a high premium.

This last two weeks about $8300 was made from selling stock from getting a covered call assigned, and only $3500 was from option premium.

_

Week 51: $10033 income using $144,700 collateral

5/29 MU 850C/680P covered strangle

680P sold to open for $1007 and bought to close for $98.

850C sold to open for $824 and was assigned.

I started by just selling the 680 Put, but when the stock price started going up I got fomo and bought a lump sum of my shares at $767, then sold the 850 Call. This is very unusual for me I typically sell a covered strangle at the same stock price at one moment.

This is super risky because with the shares and the cash secured put there is basically double downside if the stock crashes. The breakeven was $750, thats the price the unrealized losses in the shares would exceed the premium from the contracts. The share losses would continue normally, and then at around $670 thats the double downside point I would be losing $200 for every $1 drop in stock price.

But in 2 days the stock pumped. It ripped straight through the max gain for the calls, not even a little bit of resistance. I took profits on the puts early and allowed the calls to assign.

Although I did have some shares at a lower cost basis from dollar cost averaging for a few weeks, for the spreadsheet I entered the profits as if all 100 shares were bought at $767 to show consistency from where I sold the covered call.

Also I left quite a bit of profits on the table by selling at a lower price, but this ten thousand dollar gain was my biggest weekly return for the whole year so I am happy with that. I've been reframing my thinking to "losing" covered calls is actually winning.

_

Week 52: $1764 income using $80,000 collateral

6/5 MU 800P: sold to open for $2004 and bought to close for $240.

For the next week I kept it chill and only sold the 800 put. This was just so I could possibly get my shares back at a cheaper price than I sold them, or get paid up to $2000 if it didn't get there.

After the weekend the price of the contract went all the way down almost 90% so I took my profits. I could have held for some more gains but I didn't think making $240 more was worth continuing to risk $80,000 for the whole rest of the week.

For this one i also had opportunity cost losses and would have made more by just buying the shares outright and selling them in the same time frame, but I definitely wasn't going to fomo in twice especially after a big gain the first time.

_

Delta and Theta

5/29

mu680P: Delta .185, Theta 1.53

mu850C: D .185, T 1.62

6/5

mu800p: D .19, T 2.47

_

Charts

None of this is technical analysis or predicting the stock price based on past movements. I just draw the yellow lines at the stock price I sold the position and it ends at the breakeven on expiration day. This shows an approximate visual trajectory the stock has to take in order to reach assignment.

_

Metrics

I'll be making a full post on just the metrics for the full year so I'll keep this brief. My total income for the year is now over $72,000 which is about 76% yield from the average of $95,000 I have been using per week.

However, because I do have $250,000 available and wasn't utilizing it all every week, what I call the "floor yield" was less than 29%.

_

Closing Statements

I've had a good run with MU these last couple months. Fomoing in at $770 after its already gone 10x in a year wasn't a smart choice, but I was still rewarded for it. These results aren't typical and are more in line with a parabolic stock rather than a normal theta strategy.

This is also my final update. I'll continue selling weeklies but won't be updating my results anymore. I'm thinking of something new that shows the full picture with total portfolio value and not just income.

_

Thanks for reading. Let me know if you have any questions and I'll try to answer them the best I can. I'm also open to advice or criticism.

Take care and good luck.

TLDR

This last two weeks I was lucky to win all the contracts even with 2 earnings plays. I almost got blown out by one cash secured put, but got saved by a late rebound.

_

Week 49: $1808 Profits using $72000 Collateral

CRCL 140C/100P Covered Strangle: Bought the shares at $116 then sold a 140C and a 100P at the same time. I was just aiming to get the same $200 premium for both options. 

Won all 3 legs and made around $300 from this after closing right after earnings. Could have probably held on longer but I was itching to get back into MU.

MU720P: Not the best timing. This one retraced to right above the breakeven but then ended up recovering. I closed it for almost 90% return 2 days before it expired.

_

Week 50: $1220 Profits using $95000 Collateral

MU740P: This one I almost got blasted. I had worst timing ever on it, the next day after I sold it it started crashing. At one point MU was $650 while my breakeven was $715. I was more upset I would have to do a loss post than actually losing money. 

But it recovered and the minute the market opened I got the hell out. Still got gifted a cool $1000 for my terrible decision making. Although it was only 40% profit from my cost basis, it was around 85% from the peak the contract was worth.

I learned my lesson on this not to get too greedy. Even the 700P was going for 2.5% yield, but I wanted more.

NVDA210P: Another earnings play, I enjoy these it makes life fun for me. Pretty simple, sold out of the money, it didn't dip after earnings so I got an easy 97% profit in 3 days.

I had both of the CSP's open at the same time which is why its $95,000 collateral this week.

_

Delta and Theta

5/15

crcl100P: Delta .175, Theta .32

crcl140C: D .19, T .375

mu720P: D .25, T 3.75

5/22

mu740P: D .31, T 2.59

nvda210P: D .23, .65

MU has some of the wildest delta to theta ratios I've ever seen right now.

_

Metrics

Just broke out over $60,000 made and it took 50 weeks. Using an average of $94,000 in collateral per week makes it 64% total yield. But since I do have $250,000 available the real result is around 24% yield. I think the most challenging part about this is keeping some cash on the side in case your current trades go against you.

_

Charts

None of this is technical analysis or predicting the stock price based on past movements. I just draw the yellow line at the stock price I sold the position and it ends at the breakeven on expiration day. This shows an approximate visual trajectory the stock has to take in order to reach assignment.

_

Closing Statements

Got greedy green eyes this week and was lucky I survived. Gotta remember its ok going way out of the money for lottos even if its less premium.

_

Thanks for reading. Let me know if you have any questions and I'll try to answer them the best I can. I'm also open to advice or criticism because I always want to learn more and get better at this.

Good luck and see you in a couple weeks for the 1 year post.

Since this sub only allows 1 picture I only attached the proof of trades as the main. The other images relevant to this post such as the charts, proof of covered call assignment, and metrics can be seen at this link if you are interested.

https://imgur.com/a/HXRKT7R

_

Main post

This last 2 weeks I was in MU that has been experiencing a parabolic rally. Most of the profits came from selling shares when an out of the money covered call was assigned, with some additional income from selling cash secured puts.

_

Week 47 - $6719 Income using $92,700 Collateral

I started with a covered strangle on MU by buying 100 shares at $477 and then selling a $525 covered call. I also immediately sold a $450 cash secured put. This is my favorite way to initiate a position.

I ended up barely being assigned just on the last day. Although, because the shares were grinding up through the whole week, I didn't have a chance to exit for my target profit of 80%.

Good thing I perceive "losing" a covered call as actually winning.

I closed the CSP around 95% profit 1 day before expiry.

_

Week 48 - $2156 Income using $54,000 collateral.

After being assigned I tried to wheel by only selling a cash secured put with a breakeven price below what I sold the shares for.

The funny thing abouts puts is they will still have a decent value when a stock is ripping, because the implied volatility is high and I think the options market is pricing in a chance for it to retrace.

I started with a 475P, that got a 70% gain in one day so I closed.

Then I chased with a 500P, that got an 80% gain in one day so I closed.

My final chase was a 540P. That one would have barely got me back in at previous cost basis if I was assigned. This also got an 80% return in one day so I closed.

This is the first time I chased a stock with multiple CSP's the same week.

_

What happens next?

After that MU went even higher to $680, and then even $750 by the end of the week. Feelings of just wishing I held the stock were permeating my brain.

I am now priced out of MU for weeklies and will either need to sell further dated cash secured puts in order to get a chance to enter below my latest sell for good premium. Either that or I can wait for a big pullback, or be willing to buy higher.

Oh well, at least I got paid for my trouble of being available to buy shares.

_

Charts

None of this is technical analysis or predicting the stock price based on past movements. I just draw the yellow line at the stock price I sold the position and it ends at the breakeven on expiration day. This shows an approximate visual trajectory the stock has to take in order to reach assignment.

For the covered strangle you can see the red dotted line at $455 is the breakeven. That is the point the unrealized losses in the shares would have been more than the premiums I received for selling contracts.

Most importantly, all of my selling options led to opportunity cost loss these last two weeks. Especially, if I traded the shares directly instead of selling cash secured puts I would have made much more.

Thats how it goes with this strategy from time to time.

_

Delta and Theta

Since its probably the most asked question, I have been taking notes of the delta and theta values when I open the contracts.

5/1

mu450P: Delta .30, Theta 1.25

mu525C: D .24, T 1.18

5/8

mu475P: D .26, T 1.22

mu500P: D .28, T 1.25

mu540P: D .23, T 2.00

These were some of the highest theta to delta ratios I have personally ever seen.

_

Metrics

I want to highlight I added one new metric and decided to name it "Floor Yield".

This is taking my total income and dividing it by the amount I have set aside to run weeklies, which is $250,000.

So although my total yield is over 60%, thats only because its being compared with my average weekly risk.

If I do the same math but compare it with how much I really have available then it goes down to around 23%.

To me thats important because it takes some finesse to only use a portion of your total available funds to reduce the risk of being locked out due to a downtrend, while still trying to make consistent income.

_

Closing statements

Although this was my best 2 week return since starting 11 months ago, I don't think it was the best thing to do with a stock that is pumping.

Simply, if I just bought 200 shares and held for 2 weeks, I would have made around $55,000 instead of less than $10,000. (Who knew that was going to happen?)

But I know me. I would have never held with a 50% return burning a hole in my pocket. I would have probably sold at $500. If anything, selling the covered calls forced me to hold longer than I would have.

I think for that reason wheeling is a much better strategy for me, despite losing opportunity cost during certain circumstances.

_

Thanks for reading. Let me know if you have any questions and I'll try to answer them the best I can. I'm also open to advice or criticism because I always want to learn more and get better at this.

Good luck and see you next time.

My speculation is May 7th. Announcement could be as soon as tomorrow.

Previously they announced the premiers a few days before and both of them landed exactly 2 weeks before the earnings date, around 6 months before the release of the games.

Just some hopium.

Wow what a wild rebound from last month. Who the hell saw this one coming?

This last few weeks I sold 6 Put contracts which all were able to bought to close for profit for around $1400 total. I also sold one call, which of course got assigned for $3200 profits.

_

Week 44:

QQQ540P: Sold to open for $214 and bought to close for $62. This was the last day of march before the market started its reversal on April 1st. It went down 70% the next day so I closed the position.

4CRCL75P: Sold to open for $100 each and bought to close for $25 each the next day over the weekend.

_

Week 45:

SPY630P: Sold to open for $304 and bought to close for $21 also the next day. I still wasn't sure if the market was reversing at that time, so thats why I decided to be cautious.

INTU vs MU

Now after the market reversed it gave me tariff crash recovery vibes so I started to consider individual stocks are worth it again.

I was debating if I should buy the dip on a stock thats been weak, or just follow the pump on a stock that has been strong.

I noticed INTU and MU diverged in their charts from July last year. INTU was down 50% from its high, while MU was up 500% from its low.

So I did both and decided to sell a 350P on each of them whichever one wins I'll go into that.

Of course the stock thats been pumping just kept ripping and the stock that was dumping got eviscerated even more.

So I took the profit from the MU 350P, fomo'd into shares around $420 and sold a 450C. Then it kept running and my shares were assigned. I honestly felt like I was being rewarded for being a dumb fomoer.

Meanwhile my INTU put was getting smashed. I sold it for $360 and at one point it went over $1600. I was lucky to get out of there and bought it back for $205 when it bounced. Even though it was only 40% profit from my cost basis, it was down 85% from its peak price, so I thought it was a good idea to exit early.

_

Week 46:

MU420P: Sold for $434 and bought back for $65. After getting assigned and making much higher than average profits, I kept it chill and tried the wheel to see if I could get my shares back where I bought them the first time. 

Imagine my surprise when the shares continued going higher to $475. So I took my profits around 85%.

_

Delta and Theta

Since many people ask, I have been starting to take notes of the Delta and Theta values when I open the positions.

4/6

qqq540P Delta .15 , Theta .45

4/10

4crcl75P D .15 , T .17

4/14

spy630P: D .195 , T .52

4/17

intu350P: D .19 , T .55

mu350P:  D .11, T .54

mu450C: D .23, T .86

4/24

mu420P: D .18, T .81

All of the contracts had a higher Theta value than Delta value, which is what I usually look for.

_

Charts 

None of this is technical analysis or predicting the stock price based on past movements. I just draw the yellow line at the stock price I sold the position and it ends at the breakeven. This shows a simple visual trajectory the stock has to take in order to reach assignment.

Most importantly this last few weeks you can see almost all the cash secured puts were opportunity cost losses. The green dotted line is my max possible gain for cash secured puts. If I just bought the shares, or even in some cases bought calls, I would have made a significant amount more.

Thats ok for me though. I mainly just don't want to lose as much if they go down. Ok yea it kind of stings a little bit, so I try not to dwell on it too much, and just find contentment in my beer money gains.

Also I thought it was funny my covered call the shares ended up right at breakeven. Like literally within pennies. Pretty rare for that to happen. 

I find getting OTM calls getting assigned to be a successful trade.

_

Closing Statements

Mostly, I really feel like I'm getting lucky this market keeps bouncing. Seems like it might be theta season for the rest of the year just like last year again. Who knows.

Anyway, thanks for reading. Feel free to ask any questions in the comments. I'm open to advice or criticism. Or anything you want to say.

Good luck out there. See you next time.