CSP IXa: Progress of Week 2 5DTE 1% ETF Trades

Opened 5 CSPs this week for 30SEp22 expiration , which I’ll update each day as things happen:

DUST

  • Mon 0947: sold 16Δ 25.5P for 0.35, with DUST at 29.49.
  • Tue 0933: that closed at 0.15. Net credit 0.18.
  • Tue 1532: sold 18Δ 27P for 0.30, with spot 29.92.
  • Wed close: DUST dropped a massive $4.24 from Tuesday’s close, down 14%. Spot 25.86, the 27P is ITM.
  • Thu close: 25.56, 27P still ITM.
  • Fri close: 24.72. The short 27P was assigned. CB 27 – 0.18 – 0.29 = 26.53, down about 7%. Goes onto CC list next week.

LABD

  • Mon 0937: sold 8Δ 21P for 0.35, spot 29.26.
  • Mon 1310: that closed at 0.15. Net credit 0.18.
  • Mon 1312: sold 10Δ 22.5P for 0.25, spot 30.71.
  • Tue close: 26.60, trade is looking good.
  • Wed close: 22.48 , -15% from yesterday. The 22.5P is slightly ITM.
  • Thu close: 24.38, up 8% from yesterday, but the 22.5P is still pricing at 0.25, where I sold it.
  • Fri close: 23.94. The 22.5P expired , BTC order unfilled. 0.18 + 0.24 = 0.42/22 = 1.9% for the week

SOXS

  • Mon 0937: sold 11Δ 51.5P for 0.65, spot 62.05.
  • Mon 1145: that closed at 0.30. Net credit 0.33.
  • Mon 1504: sold 12Δ 53.5P for 0.60. Close: 65.77.
  • Tue close: 63.71, down 2.06, but trade is still okay.
  • Wed close: 61.25. Another 2.46 down, but still okay.
  • Thu 1540: saw SOXS up a whopping $6, but 0.28 BTC order didn’t get filled, and 53.5P has B/A of 0/0.35, with zero Bid Size. Dropped order down to 0.20, the Mid offered by ToS. May have to let this one expire because no sellers to “buy back” from.
  • Fri 1534: With SOXS at 69.45, and the put way down at 53.50, you’d think it had no value at all, but it was marking at 0.175. Yet my 0.20 BTC order wasn’t filled. Moved that down to 0.05 to take advantage of the free buy-back, if that even happens.
  • Fri close: 70.73. The 53.5P expired worthless. 0.33 + 0.59 = 0.92/53 = 1.7% for the week

TBT

  • Mon 0939: sold 29Δ 29.5P for 0.38, spot 30.56.
  • Tue 0931: that closed at 0.12. Net credit 0.24.
  • Tue 1534: sold 26Δ 31.5P for 0.36, spot 32.85.
  • Wed close: 30.68, the 31.5P is ITM.
  • Thu close: 31.05. The 31.5P is still ITM, but not as bad. With 0.24 from the banked CSP, and 0.36 more from the sale of the 2nd CSP, the trade is slightly positive.
  • Fri 1452: the 31.5P closed at 0.14. Net credit 0.20. 0.24 + 0.20 = 0.44/31 = 1.4%.

UVIX

  • Mon 0947: sold 19Δ 11P for 0.25, spot 12.59.
  • Mon 1316: that closed at 0.10. Net credit 0.13, more than 1% of the 11P, so could’ve stopped for the week, but:
  • Mon 1321: sold 28Δ 11.5P for 0.20. Closed at 13.43.
  • Tue close: 13.83
  • Wed close: 12.66. 9% drop, but the 11.5P is still OTM.
  • Thu 0931: 11.5P closed at 0.05. Net credit 0.13. Plus the first 0.13 gives 2.3% for the week. Could’ve stopped, but:
  • Thu 0937: sold 23Δ 12.5P for 0.20. Closed at 13.40.
  • Fri close: 13.97, so the 12.5P expired worthless, the 0.05 BTC unfilled, so I keep that whole premium: Net credit 0.19. Total premiums: 0.13 + 0.13 + 0.19 = 0.45, or 3.9% on time-weighted average collateral of ~1150.

UVIX in real-money account

  • Mon 1004: sold 21Δ 11P for 0.27, spot 12.40.
  • Mon 1314: that closed at 0.11. Net credit 0.14. That’s 1.2% so I could’ve stopped for the week, but:
  • Mon 1329: sold 16Δ 11.5P for 0.20, spot 13.45.
  • Thu 1010: that closed at 0.05. Net credit 0.14. That’s 1.2% more (2.4% total) so I could’ve stopped for the week, but:
  • Thu 1041: sold xΔ 13P for 0.20. Closed at 13.40.
  • Fri close: 13.97. The 13P expired worthless. 0.14 + 0.14 + 0.19 = 0.47 / ~11.5 = 4.0%

Notice that the real-money account did slightly better than the Paper Money account, with similar trades at similar times.

Average for the week:

-7% + 1.9 + 1.7 + 1.4 + 3.9 = 1.9 / 5 = +0.38% per trade for the week.

Not bad, still simple-annualizes to a 19% per year return, but that one loss of 7% hurt. It exactly cancelled the profits from the SOXS, TBT, & UVIX trades, leaving only LABD’s 1.9% profit this week. If DUST had only broken even, not made or lost, the average from the other trades is 2.2%, twice my benchmark, and quite respectable.

Average collateral calculations

As you may’ve gathered, I like to be pretty precise with numbers. So when you sell multiple puts over a week, all at different strikes, what “collateral” figure do you use for your “percentage return” calcs?

If you sell, say, a 10P Monday at the open, and it goes all week without closing, expiring worthless Friday, that’s easy: the collateral the whole week was $1,000.

But what if you sell a 10P Monday that closes late Monday, then Tuesday you sell an 11P that rides the rest of the week? Is the “average” collateral across those 2 trades $1050? I don’t think so, because of the time element: the 10P only lasted a day, while the 11P accounted for 4 days. So I think the best way to handle that is to think about collateral per day: $1000 Monday, but $1100 Tue-Fri. Add those all up: 1000 + 1100 + 1100 + 1100 + 1100 =5,400. Then divide by 5 to get $1,080 average collateral for the week. Divide the total premiums for the week by that for your percent return for the week.

That’s close to the truth, and is what I did above, but it’s not exactly precise.

Because as in the TBT trade above, ideally you’d say that the $2,950 collateral for Monday earned $24, while the $3,150 collateral the other 4 days earned $20, and compute the returns on a daily basis. Then add up those daily returns and average for a weekly return. Or something like that. I’m not a mathematician, and it gets confusing.

So I’ll just estimate an average collateral for the week and divide the total premiums by that.
SOXS is a good example: Monday’s collateral was 51.5k until the 53.5P sold at 15:04. So say Monday’s collateral is 51.5k.
Tuesday through Friday the collateral was 53.5k.
But you can’t just average those two numbers, because one was for only one day, while the other was for four.
So add them up: Monday 51.5k, Tuesday 53.5k, Wed 53.5k, etc = 265.5k
Divide that by 5 to get $53,100 average collateral for the week.

A Note on Margin

In the paper-money account, the 5 trades made $111 Monday on a notional value of 13,850, which is 0.8%.
Notional value just means how much collateral was tied up: multiply each strike price by 100 shares per contract, then add those up. In other words, if all the contracts were exercised, I’d have to pony up 14k to buy all those shares.

But what my TDA ToS account shows is “BP Effect,” or Buying Power Effect for each trade. If you have a big enough account (maybe 10k? 25k?) that’s not an IRA (I think), then TDA (like most brokers) doesn’t actually set aside or restrict 14k for me to be able to buy ALL the shares I’ve sold contracts for. You’ll have to look all this up to satisfy yourself, but brokers are allowed to offer “Reg T margin,” which usually gives you leverage of 2-to-1; basically, you can bet twice as much as your account’s actual value, which doesn’t have to be in cash, because stock/ETF/fund positions usually count too. It’s like the broker is saying, “Look, even if the theoretical loss for a stock or option position is 100%, we all know that’s not going to happen, so here, go load yourself up on positions to twice your account’s actual dollar value.” They do that out of the goodness of their hearts, of course.

But be careful with that! This is where the “margin call” you’ve heard of comes from. In a non-margin account, the 5 positions above that I put on Monday morning require about $14k of collateral so that I’d be able to buy 100 shares for each contract I committed to. $2,550 worth of DUST, $1,100 of LABD, etc. But in an account with 2:1 margin, you could sell twice as many contracts as you physically have the cash to buy, and you’d be borrowing that money from the broker. Because “it takes money to make money,” you might see that as a way to make money twice as fast, but just know that you can LOSE money twice as fast also. BE CAREFUL WITH MARGIN.

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  184. Hi I am so happy I found your web site, I really found you by mistake, while I was researching on Bing for something else, Anyhow I am here now and would just like to say thanks a lot for a marvelous post and a all round interesting blog (I also love the theme/design), I dont have time to browse it all at the minute but I have saved it and also included your RSS feeds, so when I have time I will be back to read a great deal more, Please do keep up the fantastic b.

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  185. Hey there! I know this is kinda off topic however I’d figured I’d ask. Would you be interested in exchanging links or maybe guest writing a blog article or vice-versa? My site addresses a lot of the same subjects as yours and I feel we could greatly benefit from each other. If you are interested feel free to send me an e-mail. I look forward to hearing from you! Terrific blog by the way!

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  186. Can I simply say what a relief to find somebody that actually knows what they’re talking about on the internet. You certainly understand how to bring an issue to light and make it important. More people ought to read this and understand this side of the story. I was surprised that you aren’t more popular since you definitely have the gift.

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  187. Yesterday, while I was at work, my sister stole my iPad and tested to see if it can survive a 25 foot drop, just so she can be a youtube sensation. My iPad is now broken and she has 83 views. I know this is completely off topic but I had to share it with someone!

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  188. I know this if off topic but I’m looking into starting my own blog and was wondering what all is required to get set up? I’m assuming having a blog like yours would cost a pretty penny? I’m not very internet savvy so I’m not 100% positive. Any recommendations or advice would be greatly appreciated. Cheers

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  189. Write more, thats all I have to say. Literally, it seems as though you relied on the video to make your point. You clearly know what youre talking about, why waste your intelligence on just posting videos to your blog when you could be giving us something enlightening to read?

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  190. I believe what you postedwrotethink what you postedtypedsaidthink what you postedtypedthink what you postedtypedsaidWhat you postedtypedsaid was very logicala ton of sense. But, what about this?consider this, what if you were to write a killer headlinetitle?content?typed a catchier title? I ain’t saying your content isn’t good.ain’t saying your content isn’t gooddon’t want to tell you how to run your blog, but what if you added a titlesomethingheadlinetitle that grabbed a person’s attention?maybe get people’s attention?want more? I mean %BLOG_TITLE% is a little vanilla. You could look at Yahoo’s home page and watch how they createwrite news headlines to get viewers to click. You might add a related video or a related pic or two to get readers interested about what you’ve written. Just my opinion, it could bring your postsblog a little livelier.

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  191. Woah! I’m really loving the template/theme of this site. It’s simple, yet effective. A lot of times it’s very difficult to get that “perfect balance” between user friendliness and visual appeal. I must say that you’ve done a awesome job with this. Additionally, the blog loads extremely fast for me on Opera. Superb Blog!

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  192. I have been surfing online more than three hours today, yet I never found any interesting article like yours. It’s pretty worth enough for me. In my opinion, if all webmasters and bloggers made good content as you did, the net will be much more useful than ever before.

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  193. Howdy would you mind stating which blog platform you’re working with? I’m planning to start my own blog in the near future but I’m having a difficult time choosing between BlogEngine/Wordpress/B2evolution and Drupal. The reason I ask is because your design and style seems different then most blogs and I’m looking for something completely unique. P.S Apologies for getting off-topic but I had to ask!

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  194. Hi there! This post couldn’t be written any better! Reading this post reminds me of my old room mate! He always kept talking about this. I will forward this post to him. Pretty sure he will have a good read. Thanks for sharing!

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  196. I’m not sure why but this website is loading incredibly slow for me. Is anyone else having this issue or is it a problem on my end? I’ll check back later and see if the problem still exists.

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  197. I don’t even know how I ended up here, but I thought this post was good. I don’t know who you are but definitely you are going to a famous blogger if you are not already 😉 Cheers!

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  198. I’m really enjoying the design and layout of your site. It’s a very easy on the eyes which makes it much more enjoyable for me to come here and visit more often. Did you hire out a designer to create your theme? Fantastic work!

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  199. Hey there would you mind stating which blog platform you’re working with? I’m looking to start my own blog in the near future but I’m having a difficult time making a decision between BlogEngine/Wordpress/B2evolution and Drupal. The reason I ask is because your design seems different then most blogs and I’m looking for something completely unique. P.S Apologies for getting off-topic but I had to ask!

    Reply
  200. Heya i’m for the first time here. I came across this board and I find It truly useful & it helped me out a lot. I hope to give something back and help others like you helped me.

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  201. Hey there! Do you know if they make any plugins to help with SEO? I’m trying to get my blog to rank for some targeted keywords but I’m not seeing very good results. If you know of any please share. Kudos!

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  202. Usually I do not read article on blogs, however I wish to say that this write-up very forced me to try and do so! Your writing taste has been amazed me. Thank you, quite great article.

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  203. Hello there! I know this is kinda off topic but I was wondering which blog platform are you using for this site? I’m getting tired of WordPress because I’ve had issues with hackers and I’m looking at options for another platform. I would be awesome if you could point me in the direction of a good platform.

    Reply
  204. Today, I went to the beach with my kids. I found a sea shell and gave it to my 4 year old daughter and said “You can hear the ocean if you put this to your ear.” She put the shell to her ear and screamed. There was a hermit crab inside and it pinched her ear. She never wants to go back! LoL I know this is completely off topic but I had to tell someone!

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  205. Hi! I know this is somewhat off-topic but I had to ask. Does building a well-established blog like yours take a massive amount work? I’m completely new to writing a blog but I do write in my diary on a daily basis. I’d like to start a blog so I can share my experience and views online. Please let me know if you have any suggestions or tips for new aspiring bloggers. Appreciate it!

    Reply
  206. I’m impressed, I must say. Rarely do I encounter a blog that’s equally educative and engaging, and let me tell you, you have hit the nail on the head. The issue is something which not enough people are speaking intelligently about. I am very happy that I stumbled across this in my search for something concerning this.

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  207. Hi there would you mind stating which blog platform you’re working with? I’m planning to start my own blog in the near future but I’m having a tough time selecting between BlogEngine/Wordpress/B2evolution and Drupal. The reason I ask is because your design and style seems different then most blogs and I’m looking for something completely unique. P.S Apologies for getting off-topic but I had to ask!

    Reply
  208. Hmm it seems like your website ate my first comment (it was extremely long) so I guess I’ll just sum it up what I had written and say, I’m thoroughly enjoying your blog. I as well am an aspiring blog blogger but I’m still new to the whole thing. Do you have any tips and hints for rookie blog writers? I’d genuinely appreciate it.

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  210. Nice blog! Is your theme custom made or did you download it from somewhere? A design like yours with a few simple adjustements would really make my blog shine. Please let me know where you got your design. Thank you

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  211. Oh my goodness! Awesome article dude! Thanks, However I am going through problems with your RSS. I don’t know why I can’t subscribe to it. Is there anyone else getting the same RSS problems? Anybody who knows the solution will you kindly respond? Thanx!!

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  214. Woah! I’m really enjoying the template/theme of this site. It’s simple, yet effective. A lot of times it’s very hard to get that “perfect balance” between superb usability and visual appearance. I must say you have done a superb job with this. In addition, the blog loads extremely fast for me on Opera. Superb Blog!

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  216. My programmer is trying to persuade me to move to .net from PHP. I have always disliked the idea because of the expenses. But he’s tryiong none the less. I’ve been using Movable-type on a number of websites for about a year and am worried about switching to another platform. I have heard very good things about blogengine.net. Is there a way I can transfer all my wordpress content into it? Any kind of help would be really appreciated!

    Reply
  217. Hi there, i read your blog occasionally and i own a similar one and i was just wondering if you get a lot of spam feedback? If so how do you prevent it, any plugin or anything you can suggest? I get so much lately it’s driving me insane so any assistance is very much appreciated.

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  218. Amazing blog! Do you have any recommendations for aspiring writers? I’m planning to start my own website soon but I’m a little lost on everything. Would you advise starting with a free platform like WordPress or go for a paid option? There are so many choices out there that I’m totally confused .. Any recommendations? Thank you!

    Reply

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