Back to the Wheel

February 4, 2024

I tried Credit Spreads again, and though I followed the rules of >30 days, < 30 delta, and more than 1 strike wide, my account balances never went up.
Then I thought that maybe Iron Condors on government bonds (mostly TLT, but some IEF) would work nicely, but in the first 4 days TLT went up 4.7%, blowing through a few of my shorter-term Call sides. That experiment will continue, and may yet pan out, but I’ve decided to go back to Cash Secured Puts, which I think I know pretty well. Here’s my methodology:

Look for stocks/ETFs you can afford.
Then see if they’re going up.
Then see if they offer 1% on a 1-week Put below 40Δ .
Then investigate the ticker as much as you care to.

• At least look at past price history: see if you’re comfortable with its behavior.
• Check analyst recommendations. Yahoo Finance lists them by month; generally no Underperform or Sell.
• Look at recent news.
• Maybe skim through the Yahoo Finance forum for the ticker. And/or check Reddit.
• Cross your fingers and sell the Put.

On Sunday, 2/4/24 I found the following I’ve entered orders for Monday. Ranked by price:
JBLU at 5.74, sell the 1-week 5.5P at 28Δ for 0.08. 1.3% net after the fee to open. Filled at 0.10. Closed Wednesday for 0.02, 1.3% in 3 days.
QS 6.94, 20Δ 6.5P for 0.07. (Would net 6.39, which is 0.98%.) Filled at 0.08. Closed Wednesday for 0.02, 0.8% in 3 days.
UAA 7.75, 21Δ 7P for 0.13. Filled at 0.15. Closed Thursday at 0.04, 1.3%.
MSOS 10.21, 19Δ 9P for 0.18. (The only non-leveraged ETF I found that works.) Filled at 0.10.
HOOD 10.92, 25Δ 10.5P for 0.10. (<1%, but the next week’s 10P at 25Δ for 0.25 works.) Filled at 0.30.
F 12.14, 24Δ 11.5P for 0.15. Filled at 0.17. Closed Wednesday for 0.02, 1.2% in 3 days.
CCL 16.44, 32Δ 16P for 0.22. Filled at 0.26.
NCLH 17.74, 26Δ 17P for 0.19. Filled at 0.18. Closed Wednesday at 0.05., 0.7% in 4 days.
TOST 18.67, 28Δ 18P for 0.24. (Or next week’s 20Δ 16.5P for 0.38, much closer to 1%/wk) Filled at 0.34.
PATH 23.44, 25Δ 22.5P for 0.24. Filled at 0.23. Closed Thursday for 0.05, 0.7% in 4 days.
XP 26.26, 31Δ 25.5P for 0.33. Filled at 0.35
IOT 32.51, 31Δ 31.5P for 0.45. Filled at 0.35. Closed Thursday at 0.05, 0.9% in 4 days.

SNAP‘s IV is an incredible 218%, probably caught up in the testimony on Capitol Hill about how Big Tech is harming children. But it’s chart is fairly ho-hum. From early October to mid-December it did double, but since then it’s pretty much bounced off 17 and down to 15.50. But the IV means you can go all the way down to the 12.5P at 8Δ and still get 1.3% net for the week. So I put on a trade for it too. (The ATM 1-week 17P is paying a whopping 10% in premium.)
Then I saw that earnings will be reported Tuesday after the close. Still, IV never inflates that much before earnings. Plus, SNAP would have to drop 4.50 from 17 to threaten the 12.5P, and that’s a 26% drop. I’ll try it and see what it does. Filled at 0.15. It closed up 4% at 17.45, but after hours (and earnings) it dropped 32% at 11.75. Overreaction? We’ll see what tomorrow does.

CCJ, the uranium miner, has a great chart and good prospects. With spot 49.01, the 5DTE 46P at 21Δ is offering 1.1%. I wouldn’t normally be able to afford it ($4600), but in my margin account TDA is only holding $680 collateral, or just 15%. So I put a trade on for Monday. Filled at 0.47.

Note that for all of these trades, since I’m pre-loading them on Sunday and won’t be able to tend them Monday, I’m putting them in for a price that would just give 1%. So for instance CCJ, the B/A of the 46P is 0.51/0.52. But since I only need 0.47 to net 46.39 (1%) after commission, that’s what I set the order for. That way if B/A slips down a little in the morning I might still get filled, whereas I might not at 0.51. I trust TDA (based on past experience) to give me the best fill, regardless of what I offer to sell for.

Wednesday, 2/7:
F again: 16Feb12.5P at 35Δ for 0.18. Filled at 0.18.
JBLU again: 16Feb5.5P at 35Δ for 0.12. Filled at 12.
QS again: 16Feb6.5P at 22Δ for 0.15. Filled at 0.17.
UEC: 16Feb7.5P at 27Δ for 0.10. Filled at 0.10.

Thursday, 2/8:
IOT again: 16Feb33P at 22Δ filled at 0.48.
NCLH again: 16Feb17P at 33Δ filled at 0.26.
UAA again: 16Feb7.5P at 32Δ filled at 0.09.

16Feb Expiration Week
ARKF 0.3% in 3 days: 0.5%/wk. And 0.14% in 2d, 0.4%/wk.
ARKG 0.48% in 4d: 0.6%/wk
ARKW 0.5% in 4 days: 0.6%/wk
BLNK 1.7% in 3 days: 2.9%/wk. Again: 1.7% in 2 days: 4.3%/wk
CSCO 0.2% in 1 day (34 minutes, from near the bell one day, to 09:32 the next): 1%/wk
HOOD 0.7% in 1d (29 minutes, close to open): 3.6%/wk
IOT 0.5% in 5d.
JBLU 0.97% in 2d: 2.4%/wk. And 0.79% in 2d: 1.9%/wk And 0.66% in 4d, 0.8%/wk.
LAZR was a bit of a silly play, but on Monday I sold the 2.5P for 0.03, thinking it would expire worthless and I’d keep $2.34, 0.9% for the week. But at 15:45 on Friday it’s trading at 2.53, and I’d have to spend a penny to buy it back. That drops % return to (3 – 1 -0.66)/250 = 0.54% for the week. That’s my metric, so I should probably do it, but next week’s 2.5C’s are paying 0.15, for a return of 5.7%/wk. I decided to let it ride, and … it closed at 2.53; out of the trade. 0.9%/wk.
TOST 0.5% in 5d. And another one: 1.1% in 1wk.
UEC 0.1% in 3 days: 0.15%/wk – messed up the BTC order on this one and it closed too early.
UAA 0.5% in 5d.
VIXY 1.0% in 2d, 2.6%/wk
WBA 0.97% in 7d, 0.7%/wk

23Feb Expiration Week
APPS A silly trade that lost relatively big: on 2/12 sold the 23Feb 3.5P for 0.05. Closed it 2/23 for 0.40. -5.2%/wk. (It lost $35 on $350 collateral, plus $1.32 in fees.)
ASTS 1.1% in 6 days: 0.9%/wk
BLNK 2/15 sold the 23Feb3P for 0.10. Closed 2/23 for 0.21. -3.0%/wk
CCG 2/5 sold 9Feb46P for 0.47. Rolled down and out to 16Feb45.5P for 0.02. Rolled out to 23Feb for 0.20. Rolled out to 1Mar for 0.07. Wasn’t coming back, so on 2/23 BTC for 4.75. Credits of 47 + 2 + 20 + 7 = 76. But 8(0.66 fees) = 5.28, so netted only 70.72 to subtract from the $475 closing cost, so lost $404 on the trade. Say average collateral was 4575, and that’s a loss of 8.8%. But it was over 18 days, 14 trading days, for -3.1%/wk.
CCL 0.39% in 3d: 0.6%/wk (Closed early to free up BP for a TLT IC repair.)
CGC 2/16 sold the 23Feb3.5P for 0.14. Closed 2/23 for 0.28. -0.9%/wk
CSTM 0.68% in 3d: 1.1%/wk
FCX 0.6% in 5d/1wk.
LCID 1.1% in 5d/1w. And 2.44% in 3d: 4.0%/wk.
M 0.5% in 4d: 0.6%/wk
MOS 1.3% in 4d: 1.6%/wk. And 1.1% in 3d: 1.8%/wk.
MSOS 1.1% in 3d: 1.8%/wk
NIO 0.79% in 7d: 0.5%/wk
RKT 1.0% in 7d: 0.7%/wk
SE 0.57% in 5d/wk
TOST 0.55% in 5d/wk
UEC On 2/12 sold 23Feb7.5P for 0.10. Closed 2/23 for 1.08. 108 – 10 +2(0.66) = $99.32 loss on 750 collateral: 13.2% over 9 trading days, or -7.3%/wk.
VRT Buy-write on Tues: stock at 62.05, CC at 2.34. The Call closed Wed at 0.15, sold another for 0.75. That closed Thurs at 0.30. Sold another Fri for 0.95 (7DTE, 30Δ).
WBA 0.5% in 6d: 0.4%/wk

01Mar Expiration Week
ARKG 1.9% in 3 trading days: 3.3%/wk
GM 1.2% in 4 days: 1.5%/wk
HUT 1.7% in 6 days: 1.4%/wk
LAZR 3.6% in 8 days: 2.3%/wk
M 0.7% in 3 days: 1.2%/wk
MPW 2.4% in 4 days: 3.0%/wk
NCLH 2.4% in 18 trading days: 0.6%/wk
OPEN 2.1% in 6 days: 1.7%/wk
RIVN -4.3% in 7 days: -3.1%/wk
SKLZ 2.4% in 5 days/wk.
SPWR -3.4% in 2 weeks: -1.7%/wk
TGT 1.0% in 5 days/wk.
UAA 1.4% in 5 days/wk
XPEV 1.0% in 2 days: 2.7%/wk (33 minutes from Friday 15:27 to Monday open) Also: 1.8% in 6 days: 1.5%/wk

08Mar Expiration Week
M 1.0% in 5 trading days/1wk
MPW 2.3% in 4 days; 2.6%/wk
MSOS 3.0% in 4 days; 3.8%/wk
NCLH 1.03% in 4 days; 1.3%/wk
NIO 1.15% in 10 days; 0.5%/wk
PLUG 2.66% in 4 days; 3.3%/wk
QS -3.7% in 16 days: -1.2%/wk. Stock going the wrong way, so BTC’d for a loss.
SNAP -2.5% in 16 days: -0.8%/wk (Sold too early because I forgot I had rolling credits; that inflates the price of the Put you’re holding, so you can’t BTC for half or whatever.)
TGT 1.8% in 3 days; 3%/wk
UAA 1.0% in 4 days; 1.2%/wk