Closing the Feb7 $LULU iron condor

17Jan - closed this today with stock at 242ish for good win. target for exiting iron condors is around 21days left to opex and/or between 25%-50% of max profit. click the youtube video link below to see why. so today was 21days on the dot. im sure you could milk out some more decay by holding over the 3day weekend but trying to be mechanical on exits to get the high percentage of winners. since entry the stock went above 240. my put spread premium remaining at that time was only 5cents so I took profits on that and resold at higher strikes / higher delta. settled on the 215/225 credit put spread for .80 credit, 225 at 13 delta. I also doubled the lots. a 16delta is a one standard deviation move so in order to get little bit more premium I doubled the lots instead of going for a higher delta (higher strike price) in this case went to 2lots (keep the original 250/260 credit call spread untouched) so a credit of 1.60

200/210 credit put spread - .97 profit
215/225 credit put spread - 1.60credit received
250/260 credit call spread - 1.48 credit received
"adjusted" iron condor total credit $3.08 which closed today at 2.33. total profits after adding it all up was $1.72 for a 42% of max profit win. made all the profits on the put side, the call side was a scratch. worked out as expected though. closed right at 21 days and within the 25-50% target. starts to add up when you increase in lot size. im gaining experience and confidence on rolls and adjustments and that will transition into little bit higher lot sizes as the bank account increases. no bullshit.. review that video link for the research and reasoning behind taking profits like this vs riding to expiration. its a gamechanger. hope you followed and make some walking around money too. on to the next one.

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27dec

entered into iron condors on LULU on Friday with stock at 230ish. had a couple cash secured put sale trades right after earnings a few days back and have a diagonal spread going currently so I have a bullish outlook on this name. im on the lookout for a selloff day so premium pops in order to do another put sale.

using some of the guidelines from the Tastytrade videos ive seen recently

Sold the Feb 7 200/210 put spread and the 250/260 call spreads to make an iron condor for $2.50 credit.

Ideal entry points are near 45 days to opex and high IV rank/percentile and strike selection near 1standard deviation move which is near 16delta.

Feb7 strikes give me 42 days, the 210 put strike was at 14delta, 250 call strike at 23 delta. I feel there is more downside risk so went a little further down in delta on the puts and wanted to be comfortably below the 50day moving average and the low from the brief earnings selloff. the upper strike would be in nicely into 52week high territory. nothing special about the IV unfortunately.

Per the Tastytrade videos, statistically its a higher win percentage by going to a wider striker selection (the 10dollar wide puts and calls) vs doing the 5dollar wide for more lots so I went with the 10dollar wide. Ideal credit received is 1/3rd the width of strike but would have to be higher in delta for that so shooting for at least 25% of width on the 10dollar wide.

targets for exiting is 25-50% of max profit and/or near 21 days left to opex.

Tastytrade youtube video on managing winners

CLOSING The $ROKU iron condor 31Jan opex

7 Jan - this week took profits according to plan. either in the 25-50% of max profit range or near 21days left till opex.

closed this for $1.00 for a 41% of max profit winner, 22day hold. per the Tastytrade videos/research, 21 days to opex and/or at 50% of max profit is the optimum point to take profits. after that the risk return changes against you. see some previous posts with links to youtube videos of their work.

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this week also entered another iron condor on ROKU as the first one is working.

Sold the Jan31 105/110 put spread (14delta)
Sold the Jan31 160/165 call spread (27delta)
for $1.70 credit
IV was 60+
46days to opex at time of entry

profit targets again are 25-50% of the basis ($1.70) and or close with 21days left to opex



purple on the chart are the short call levels

todays no trade on $FDX

didn't enter a trade today on Fedex and heres why. was watching the reaction to the earnings after hours yesterday and was hoping for a continued down move enough so i could possibly sell cash secured puts 30-45 days out below the low near 137ish. big selloffs are usually high probability trades since the volatility spikes temporarily (meaning the option price) and the natural price increase for the puts since its a down move. what i hope to see on stocks with this type of move is where you see the earnings results / conference call comments that appear to be positive.. weve all seen them where a company is growing 40+ % or whatever and some metric is slightly off or just misses the consensus number and it sells off. the fast money desk maybe talks it up that the earnings were good or going forward looks great. essentially the stock sells off on good news. LULU comes to mind from a few days ago.

i dont follow Fedex carefully outside of the passing references on cnbc but what seemed to be going on with Fedex was going down on bad news. earnings misses, outlook poor or unconvincing, and not positive commentary on fast money. had the selloff but was lacking the positive portion needed to enter into a put sale. although a put sale might work out with time decay, im looking for the volatility crush (price decreases as volatility drops) AND some upside movement. lastly remember my rule that if the trade doesnt feel right (gut check) , i pass. my gut overrides and technicals or targets. another rule i have is only sell cash secured puts on stocks im ok owning and given the current sentiment i would not want to own Fedex.

save the buying power for another trade elsewhere

18 Jan update to Boeing $BA position

18 Jan - so best case would be stock is near 340 at time of opex so I could resell a higher strike short call for juicy premium for earnings week, instead with a week to go the stock was near 330ish and the short call (jan24 340) was at a 78% of max profit winner of $3.47 and only 93cents remaining. just missed out on the 4-5dollar down move at end of day but near 330 I closed the short call and instead bought a 1x2 call ratio spread, buy the Jan24 330 call and sell 2 of the Jan335 calls . that trade for zero. the "2nd" short 335 call is not naked since I have the Jan2022 call still. so its just like having 2 calls spreads. thesis is that for zero cost I have a profit range of 330-340 at opex with max profit of $5 at 335 pin. close out this ratio on jan24 and sell another short call or ration prior to earnings on 29jan depending where stock is at.

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2 Jan - stock was up +3 on the day back to 330 ish. resold another short call to get the diagonal spread back Sold the Jan24 340call at $4.40. delta 35 . stock at 332 on 3Jan

went with Jan24 opex since its the last weekly prior to earnings on 29jan. selling a opex after earnings youre not getting the decay since the IV is increasing for the earnings. target is 75% of max profit before closing and reselling a weekly for the earnings IV spike.

30 dec - closed the short call today at $1.72 which is a 60% of max profit win. resell another call on an up day. lowered the cost basis of the DITM call for $3+



27 dec - update to my Boeing diagonal spread. since entry 10days ago the CEO has been fired, some more emails surfaced and the stock is up a few bucks to 330ish. my short call is doing its thing and has depreciated 35% and going for $2.80 now. reevaluate after another week as to where to roll the short call with earnings at end of Jan

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17 dec - have to say im about having Phil Lebeau overload but I guess its his beat. Maybe Phil showing up in person on Fast Money marks a bottom in Boeing. my thoughts on the stock. been getting considerable coverage on CNBC with nearly all of it being negative. despite that the stock has been range bound. had the "rumor" yesterday during market hours that they would halt production of the 737 Max and had the down move. the official news came out after hours and I was watching for a flush down 5-10% in order to price out some cash secured put sales.. seems that the big move happened with the rumor during market hours and stock closed in the green today

you've heard the saying about when a stock stops going down on bad news that it might be an indicator of something. was pricing out a 300 short put about 30days out for $3.00+ but instead went with my go-to trade of buying an in the money call (LEAP) and selling a near term upside call making a diagonal spread. also called a poor mans covered call

additionally as mentioned on the Fast Money desk and in the twitterverse that everyone was looking at the 320ish level to hold which seemed to have happened for today at least.  margin requirements will differ but in my head I always figure I need to have the full amount of cash available if I am put the stock so instead of committing $30000 for the put sale I went with the diagonal spread for about 25% of the capital requirement. I have an iron condor on in the regular Jan exp options so I went to earlier opex to sell the short call just to keep the strikes and expirations easier to manage

Bought the Jan2022 300 call
Sold the Jan 10, 2020 340 call at $4.30 (32delta)

goal is to sell upside calls bringing in premium while the company and the FAA do their thing to get the planes in the air. would assume that down the road once the grounding is lifted the stock takes off on the news. I expect the stock to move around a bit based on the latest news but have plenty of time since the long call is 2022.

$LULU short put trade today -2nd one

13Dec - another small win on this one. stock was down 3-4 in the morning so went out farther to gain some premium since the IV from yesterdays earnings selloff had already fallen, still targeting 25ish or lower delta. stock started to comeback after lunch so went ahead and entered a limit order to close in case I was away from computer. filled for a gain, 31% of max profit.

Sold the Jan20 210put at $3.60, IV was 30ish, delta 26
Bought back at $2.50 for $1.10 gain

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12 Dec - stock dropped $10+ from earnings yesterday. was around 219-222 when I was looking at it this morning. the call fly from below will go out worthless but only risked .35, the earnings seemed decent so on the big down move the put premiums get juiced so I went out a few weeks in order to get decent premium and a couple weeks in time if needed. my eye goes to the 20delta area for starters always. definitely wanted to have the strike below the 50 day.

Sold the Jan10 202.50 put at $2.05 . delta as time of sale was 16, stock at 220ish

stock was sideways and up a couple bucks near the end of day so the IV comes down a bit as well. was showing a 50% of max profit gain so closed the trade.

Bought back the put at $1.00

again my new profit targets are 25-50% of max profit vs holding to try to get 75% + or to opex and tying up the buying power. can do more of the "small" wins in the same time frame as holding to opex. not a large dollar winner. usually do between 1-5 lots depending on the buying power so the small wins can start to add up.(and the winning put sale makes up for the loss on the call fly).  if continued down move will look to resell a put.

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screwed this up already, posted on twitter yesterday:
going to price out a call butterfly on $LULU on wednesday prior to earnings. at 230ish now the expected upside move is 19ish so 250 like mike says, im thinking the 245/250/255 call fly using weeklies. i want to risk even less than mikes $1.85


I was setting up the trade for shits and grins today so I could have ready for tomorrow and just watch the pricing as it moved around today. was going to submit it on Wednesday afternoon based on current pricing and expected move. regardless I hit submit instead of save so I own it. with stock near 229-230 the weekly options were pricing in a $20ish move for earnings. Mike had a calendar spread trade on Options Action which got me looking. $1.85 was too steep for me so with the assumption that the powers that be gets the expected move correctly and a bullish bias gets the stock to 250ish. entered a call butterfly 245/250/255 on this weeks options.

buy 1 of the 245 calls
sell 2 of the 250 calls
buy 1 of the 255 calls
limit order of .35 filled instantly and was 2cents under the midpoint

Just a one lot to amuse myself. Implied volatility is high so if earnings seem good but stock sells off hard I will look at a short put sale. so I might have a win in either direction and .35 not a big loss if wrong. will not  hold to expiration since that rarely works out well, just a pop to 250 area should have a decent percentage gain. cant say I follow the stock, the high IV gets it onto my watch list for the moment

square box is rough profit area, a selloff to near the 50day at 210ish gets me looking at a cash secured put sale. best case short strike 185 or lower but 190 or lower is a level to look at also. lets see what happens with earnings and the resulting commentary

EXITING the Boeing $BA iron condor

27 dec update- something im finding compelling from the Tastytrade videos ive been going on about is the adherence to the mechanicals of trading. following the probabilities, the statistics, entry and exit targets, profit targets. really reduces the emotional highs and lows. one of their takeaways is to close iron condors / short strangles between 25-50% of max profit and/or near 21 days till opex. one of the videos ive linked before shows how the option decay rate and the percentage of profits change near the 21day mark. so in order to be disciplined and follow their bullet points I exited this revised iron condor yesterday at the 21day mark. although im confident that my strikes would have made this more profitable the risk return has now changed. read from the bottom and you will see that I rolled down the call spread portion for a profit during the 17days I held this. felt like longer. my cost basis of the "adjusted" condor was $2.19 and exited at $2.15 for essentially a scratch with the chump change commissions added in. the profits on the credit spread came to be .67

im going to figure my profit as such --- total credit received of $2.90 (see 21dec update) with .67 profit give me a 23% of max profit winner

this methodology is new compared to how I used to trade so granted this trade is not a big dollar winner for a one lot but until ive had multiple trades on with my own money, including outright wins, making adjustments, etc im keeping my lot sizes between 1-5 depending on the underlying. validating the concept first. point being is to focus on making multiple 25-50% wins and the profits build and then you can make Najarian size trades. more importantly preserving that mental capital with many winners keeps you in the game.

on to the next one.


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21dec update- 27days till opex now, this week made an adjustment to the call spread portion of this iron condor since the stock moved towards the puts

Closed the 380/390 call spread at .23 (for .71profit)
Sold the 355/365 call spread for $1.28 credit at time of sale

Initially received .91 for the put spread plus the $1.28 from the "new" call spread give me $2.19 cost basis. again going to just ignore the profit from the 380/390 call spread since im essentially establishing a new iron condor at 305/315/355/365. but you can also argue that I received $2.90 ($2.19 + the .71 profit). the stock has moved down a bit since the new call spread sale so that portion is up 40% but has plenty of premium remaining so another adjustment is not needed yet. give this another 10 days or so. would like to exit the "new" condor in the green. earnings are week after opex so cant enter new condor yet. will be continued tape bombs till then

purple are the new iron condor short strikes

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Boeing seems to be mentioned daily on CNBC / Fast Money and all the news is bad news seems like and as mentioned on air the stock still has not sold off meaningfully. using that as a basis going to enter my first trade ever in Boeing with an iron condor, stock has been relatively range bound last 6months. nothing special with the IV so just expecting some time decay with target of 25-50% of max profit

Sold the Jan 305/315 credit put spread. 315 delta at 12
Sold the Jan 380/390 credit call spread. 380 delta at 15
total credit received was $1.83
38 days to opex

as ive seen in some of the Tastytrade videos on youtube its more effective to chose wider strikes (the 10 dollar wide in this case) vs 5dollar wide with bigger lot size. wanted to be no higher than 15 delta which is near 2 standard deviation move. the levels on the chart work well also with the 380 level near some near term resistence and the 315 level under some near term support. again the target profit is 25-50% of max profit, not hold till expiration.

Closing the $ROKU adjusted credit put spread

6jan - ROKU up 5+ to 143ish today so took the opportunity to exit the remaining portion of the iron condor that was adjusted. that being the Feb115/120 credit put spread. wanted to exit this "position" in the green and not have the spread open since it included next months earnings.

closed the feb115/120 credit put spread at 1.35 this a.m. on the up move. was last portion of the adjusted iron condor. with this last trade was able to exit the "position" in the green. $ROKU

was a green trade of .55 so no complaints. continue to gain experience/confidence with the adjustments / exits of iron condors so im happy with the outcome. green is green

31 dec  - with 17days till opex went ahead and did a partial exit / partial roll. the optimum exit for iron condor is near 21 days per the Tastytrade studies. the "adjusted" 120/125/155/160 iron condor was 40cents in the red and I thought I saw a premarket trade in the 128 range but stock was 130-133 range when I got to the computer in the morning. point of exiting near 21 days is that now you have a higher likelihood of stock moving against you so better to exit and redeploy the capital on the next trade. instead of closing for a loss I rolled out the put spread portion to the next expiration where I could move down in strikes for a credit. that being the 115/120 strikes now for Feb opex. credit was .23 I believe off memory. this opex catches next earnings but wanted those lower strikes and always want to make adjustments for a credit. 29 delta for the 120strike

the call spread portion I closed out for a profit of .30 plus had the profit from the 180/185 calls of .40.

quick back of the envelope math (actually did use an envelope) need about .90 of decay off the Feb115/120 to put the entire position into the green. Im still working thru the mechanics of optimum entries and exits and position adjustment / defense but im happy with this outcome... adjust the puts that are being threatened, gained another month for a credit, lowered the strikes for a credit and within striking distance of being in the green. because the Feb opex catches earnings im holding off for the moment on adding the credit call spread to reset the iron condor. no hurry since im also working another iron condor and a short put/credit spread as well. was just near 140 2 days ago so a return to there will either exit the puts or add the credit calls for the iron condor.. but lean to exit altogether since Id rather not have this on thru earnings. If im going to enter a position to include earnings I will do so a day or two prior to base it on the stock price at the time.

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28 dec- another week gone by and the stock is at 139ish, smack in the middle of the "adjusted" iron condor 120/125/155/160, price is near breakeven for the total position with the previous call spread adjustment profit thrown in and the stock is down 8 bucks since entry. going to give this trade another week and see where we are on Friday, want to exit this with a green board soon. IV is staying high so not getting any volatility crush




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21 dec update- been couple weeks since entry, stock was at 147 at entry and closed at 136ish yesterday. since it moved in the direction of the put strikes the value of the put spread is up (mark to market loss) and the call spread is a gain. the call spread short call had a delta of 7ish so little premium remaining. adjustment made was to close the call spread and resell another call spread with strikers lower, looking for the same short delta area that I had with the previous strikes, that being low 20's. went with the 155/160 credit call spread

closed the 180/185 call spread .30 debit
sold the 155/160 call spread .75 credit

so I received .40 credit by making the adjustment with makes the iron condor 120/125 155/160. initially received .93 credit for the puts plus the .75 for the new 155/160 calls get me back to 1.67 credit as my basis. I just book the gain from the 180/185 call spread and don't figure it into the math, easier for me to track. the "new" iron condor is technically underwater since the stock is closer to the put spread since entering the trade 2weeks ago. profit target remains 25-50% of the basis ($1.67). IV remains high and is not getting much of a crush. the other target noted repeatedly by the Tastytrade videos is exit the trade at 21days remaining. I will do so as well if I show a profit on day 21, may have another adjustment prior to but see where stock in then. im trying to stay with the discipline of being more mechanical on exits and entries.

chart shows the new call spread short call moved down from 180 to 155. purple is a further out iron condor I will blog separately

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have to say I'm impressed with the educational content of the www.tastytrade.com site. has made me a better options trader and I've only been watching their videos a couple months. the readers digest version of their strategy is :

- sell premium with the IV is high, they have a IV rank metric on their platform that they use and want the IV rank to be over 50% which I believe means the IV of the stock is 50% higher than usual (and will revert to a mean). the Etrademonster platform has an IV rank also but doesn't seem to match up to theirs so I refer to the IV of the specific option strike I'm selecting.

- sell premium at / close to 45 days and take profits at either 21days till opex or the 25-50% of max profit level. seems to go against traditional thinking but after seeing their videos the point of this is that you get the best volatility crush in the first couple weeks (from 45days till 21), after that the gain is more on time decay. holding closer to 21 days has more risk of market movement with minimal remaining premium.. in other words take the meat of the volatility crush and some time decay as your profit and then move on to the next trade vs milking it for the last penny.

- target strikes for selling at 1-2 standard deviations out of the money which is about 15-20 delta. these strikes gives you 85%+ winning trades.

- when selling credit spreads / iron condors the goal is to take in about 1/3 the width of strikes as premium( $5 wide strikes, goal to take in $1.67).. the high IV juices the premiums so you are likely to get this amount

takeaway, take profits sooner (manage the winners) and sell only high volatility

having said all that, I'm trying to catch a couple of their streaming shows during the morning hours since the crew actually puts on trades vs the CNBC repetitive commentary. a viewer suggested an iron condor on ROKU this morning. I don't follow closely, had a few Disney trades a few weeks back so just using the methodology of the videos:

Sold the Jan 120/125 credit put spread (delta of the 125 short put is 18, IV 60+)
Sold the Jan 180/185 credit call spread (delta of the short 180 call is 21, IV 60+)

makes the position an iron condor for $1.66 credit (take in $1.66, max risk $3.34 at opex without adjustments)

breaking this down:
-sell high IV... yes , was 60+
-sell close to 45 days, yes.. 42days to opex
-sell 15-20 delta... yes
-collect 1/3 size of strikes..yes, collected $1.66 for one lot
-target taking profits at 25-50% of max profit

here is a youtube video on taking profits on iron condors as a reference Tasty Trade video

closing the Mastercard $MA position

6Dec - closed out this position, felt like I had it on for longer but after entering all the trades into my spreadsheet today I see it was only about 10 days. to recap:

- I sold a 282.50 put and an upside call credit spread for added premium... I was calling this a defined risk strangle, the Tastytrade crew calls this a Jade Lizard. I will not be calling this a Jade Lizard,. im going to go with a Poor Mans Strangle (copyright pending... not.)
- I took some profits on the call spread and resold another call spread at lower strikes to bring in some more premium.
- closed the entire position on 6 dec with stock near 290... let me quote what I wrote below:

 "profit target will be between 25-50% of max profit. I've been tooting the horn of the Tastytrade videos I've come across recently that have greatly improved my entries and exits, so here is a good video on when to exit Tastytrade video "

-so after doing the spreadsheet entries im at a .96 profit on this which is near 50% ish of max profit. in hindsight the call spread adjustment down was not needed to salvage the win. to emphasize...objective is not to tie up buying power by taking the trade to expiration but instead to book profits in the 25-50% range and do that repeatedly with that same buying power. im staying small lot quantity until my comfort level is higher since this is new methodology for me so granted its not a large dollar winner but as comfort level increased so does lot size.

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3Dec - as posted on Twitter I closed out the call credit spread portion of this position at .16 as stock was selling off with rest of market, even went below the put spread. still had some time before opex so didn't need to adjust the short put. later on in afternoon I resold a call credit spread at lower strikes bringing in additional premium, sold the dec13 295/300 call credit spread for .85 credit, 23delta of the 295 call. the 295 level would be a new high for the stock, of course after hours Mastercard announces the buyback approval and dividend raise and stock pops 4-5bucks. taking in more premium via the credit spread lowers my downside breakeven to near 280. see where we are at next week to either exit position or roll the short call if needed

.

going to keep using the Defined Risk Strangle name for this 3leg trade. selling a strangle benefits from 2 things, time decay and a drop in the volatility of the stock. so putting this on with high volitivity gives you a very high probability of profit. a legit strangle for this would have been sell the 282.50 and sell the 300 call. that would have brought in about $2.79 in premium for a one lot. the part of a strangle I'm not comfortable with is the undefined upside risk. I'm ok with downside risk since its essentially a cash secured put sale and I'm ok owning the stock if necessary. so to mitigate the upside risk sell a call credit spread, the 300/302.50. yes it reduces my credit but caps the upside loss.

total credit received was $2.06. without adjustment if stock moves higher than 302.50 at opex my max loss is just 44 cents (300/302.50 is $2.50 wide. the $2.50 minus the $2.06 received is 44cents)

receiving the $2.06 lowers the downside breakeven as well to 280.44 at opex without adjustments. 14days till opex and best case stock moves sideways, volatility comes down and position loses value (profits as in buy back cheaper to close). profit target will be between 25-50% of max profit. I've been tooting the horn of the Tastytrade videos I've come across recently that have greatly improved my entries and exits, so here is a good video on when to exit Tastytrade video


new Mastercard entry $MA (defined risk strangle). sold Dec14 282.50 put near 1.65ish, sold 300/302.50 call credit spread at .45ish. total credit 2.06. puts delta 22, calls delta 21. breakevens at 280.44 / 302.06 at opex

Stock replacement trade for $AAPL

got to thinking about my Deep in the Money (DITM) diagonal spread strategy and will throw out a suggestion after seeing a twitter post from @kgirljohnson. she has been making some good cash selling covered calls a few months out and selling puts. first off kudos to your bank account for having 700shares of AAPL. here is a possible alternative to boost the cash flow if you are in a similar situation. using pricing as I type now and making some educated guesses:

so having 700 shares of AAPL, sold 5lot of the Jan 275 call at $5 for nice $2500. now what to do with the other 200 shares... 200 shares is about $53200. instead of selling 2 additional covered calls..

Sell the 200 shares and replace that block with deep in the money Jan2022 calls specifically the Jan2022 210 calls going for $76ish ($7600 per contract) and .80delta. with a limit order might be able to get a 7 lot.

now you have 500 shares of the common and 7 call contracts. Now sell the Jan2020 275 calls against the 2022 calls turning it into a diagonal spread. 7 short calls at $5 gives you $3500 in additional premium in addition to the already collected $2500 from the covered calls for $6000 total. the .8 delta on the 2022 calls means the option move 80% of the stock movement. stock goes up (or down) 10 bucks the option moves 8bucks. and then repeat the upside option selling in future months. earnings are at end of Jan so premiums will increase. yes there is a likely tax hit on selling the 200 shares.

I personally own no stock instead I own the deep in the money calls from 2021 or 2022 since I don't have the bank roll to own 100's of shares of these high dollar stocks. can buy multiple calls and increase my premium stream and I participate in upside moves.

Just a thought, a couple months of $6000 premium gets you that new Cybertruck.

Kayla Johnson

@Kgirljohnson

Got the $5 right at the end of the day!

STO 5 Jan $275 strike calls against stock. $AAPL. $2500 dividend!
Looking to sell another 2 lots of 5 if we continue higher. Will wait till Fri. to enter order, maybe the Turkey high pops Apple up some more.

Enjoy time with your family!

$BIDU entry today. Defined risk strangle ?

9dec update - today with stock at 115:

the short 110 put delta is at 31ish
the call credit spread 130/135 had .35 remaining in premium and the 130delta was at 12ish

I closed the call credit spread at .35 and resold a lower set of strikes 125/130. selling the 125 strike at 23ish delta gets me back to the delta I was targeting initially from the first call spread. the 125/130 spread sold at .76 so I gained an additional .41 in premium. again the profit goal is 25-50% of max profit like I noted below, will exit closer to 25% im thinking to free up the buying power for something else. lines on the chart show the breakevens at opex in January. note the lower breakeven would be below the 50day moving average.

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There might be a cool name for this trade but I sure don't know it. was either the Defined Risk Strangle or a Kind of Iron Condor.

my last blog post was the TSLA iron condor using the methodology of the Tastytrade guys. had a few minutes today to stream one of their live videos during market hours and the dude was mentioning BIDU and selling a strangle. In general I don't sell the naked strangle preferring to have a long DITM LEAP call already, so a Cash Secured Diagonal Spread Strangle I guess, like my AAPL position...long 2021/2022 DITM calls, sell upside calls (the diagonal spread part) and then also sell downside puts that are cash secured.

anyway,  the guy online is selling a strangle, Jan opex 52days out, the short put(110) and call(130) at about 20delta each. instead, using his strikes I was looking to make this an iron condor (105/110/130/135). the target premium for a $5 wide is 1/3 the width.. $1.67... was not getting it with the condor. remember my rule of only selling short puts on stocks I'm ok owning if I have to buy at opex… got me thinking what if I don't buy the 105 put. as in don't sell the credit put spread of the condor. still sell the call credit spread as usual to have the defined risk to the upside. by not buying the 105 call I save a lot of premium. so going off memory from this afternoon the 3 leg trade with stock at 119ish...

Sell the Jan2020 110 put at about 2.02 credit (delta 23)
Sell the Jan2020 130/135 call spread for .80 credit (130 delta 24)
stock IV of 52
Total credit received $2.82 for a one lot.

at expiration:
close at 135 or higher - max loss $2.18
close 110-130 - max profit the $2.82 I collected today
downside breakeven is - 107.18 (the 110 short put minus the $2.82 collected) and I have to buy the stock at 110.

note the Implied Volatility is at 52 which is high. Again, per the Tastytrade videos I've watched recently the objective is enter trades at / near 45 days out and take profits between 25%-50% of max profit, so $.70-$1.40 and/or with about 21days remaining. this is to take advantage of a decrease in the IV which means premiums go down which the position decreases in value (you buy back cheaper for a gain)

I'm more concerned with an upside move hence not selling a legit strangle with an upside short call with unlimited risk. the 135 call caps that risk. a down move below 110 is easier to manage IMO since I can roll out the short put for flat for more time or for time and a credit. going to keep lot size low until I can see proof of concept with my own experience first. so if things work as statistically expected that $2.82 amount should decrease a bit every day barring a significant move in either direction.

lines on the chart show the edges of the short put and call credit spread but will be looking to cash out prior to opex.

update to the $TSLA iron condor

31 dec -  one advantage to an iron condor is you know what your potential max loss would be, so reading from the bottom you will see I initially collected 1.75 credit so max loss would be 3.25 . its that 3.25 you can shoot against to chip away at it to get closer to breakeven or reduce your loss at opex. since my 21dec update, on 23dec I added ANOTHER call credit spread way out of the money and one week later in the expiration to be the last cycle prior to earnings. I sold the 480/490 call spread for $1.20 credit... $1.20 to chip away at that 3.25 max loss number plus the credits from the put sale adjustments.

today I closed the put spread portion (the 3rd set of puts for this condor) at .46 which is .44 profit.

strategy is if stock sells off again in early Jan I will resell credit put spread to further chip away at that max loss number or possibly a cash secured put. ive had two orders in to sell cash secured puts at 365 but didn't fill. still holding the underwater credit call spreads of 385/390

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21dec update- serious movement with this stock, up 70bucks since I entered this iron condor, since entry I have adjusted the put spreads 2 times for total $1.27 profit which knocks down the potential loss at opex. since entry I:

closed the 290/295 put spread
sold and closed the 320/325 put spread
and this week sold the 360/365 put spread (.90 credit for this spread)

gives me a "new" iron condor 360/365/385/390 for $1.85 basis

stock is 405ish now with 27days to go to opex and clearly has blown thru my call strikes. the stock can go down just as fast (remember the Mandalorian truck broken window day) but im looking for a down move to get a mark to market gain and best case can exit the "new" condor in the green. would be unexpected that the stock closes between 365-385 to realize the max gain but with all this movement would be happy to just exit with a green board. holding for now

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have to give credit where credit is due.. I stumbled across an options video on youtube a few weeks ago from the guys at TastyTrade, after doing some searching ive discovered numerous options educational videos from them that are really eye opening. ive always thought ive been smarter than the average bear with options trading but some of their videos have made me do things differently. videos where their team shows backtests to reinforce the probability of profits on options trade. emphasizes when to take profits and scenarios to enter premium selling trades. I have added 20+ of their videos to my watch later list and try to watch one every night. visited their site for the first time today at www.tastytrade.com and they have live streaming shows with actual trading vs the Fast Money options trades that have the pump and dump feel to them or the superstar paper traders on twitter. I encourage you to watch a few of their videos. should learn a few things. disclaimer-I am not a contributor , subscriber, member, account holder in anything from tastytrade. im just passing on some excellent videos for you to add more info for your toolbox of knowledge.

I added this paragraph since my strategy for this Tesla iron condor refers to their methodology. per several of their videos the sweet spot to enter an iron condor is about 45 days till expiration and on stocks with high volatility AND not holding till expiration. but instead taking profits between 25-50% of max profit. letting the volatility come in lowers the IC premium and taking profits at the 25-50% range statistically gives you 80-95% winners. point being to make a lot of the 80-95% small to medium winners instead of going all the way to expiration for that last penny. not really too different than what ive been doing but their backtesting puts some statistics to the method that gives me a better entry and exit point, or reinforces a No-Trade(my gut).

one of the guys, Tom, at tastytrade developed the Think or Swim platform which is popular. Im on etrade via Trademonster platform

here is a good video to watch on this.. iron condor video at Tastytrade

so the trade today was entering the Jan2020 (53days out) 290/295 385/390 iron condor, collecting 1.75 credit per lot. their videos suggest selecting strikes that are about a standard deviation out of the money and collect at least 1/3 the width of the strikes in premium. standard deviations might show on the TOS platform, I don't see them on the etrademonster platform, but I prefer deltas. one standard deviation is in the low 16ish delta.

the 290/295 credit put spread was a 19delta (the 295strike was 19delta)
the 385/390 credit call spread was a 21delta (the 385strike was 21delta)

I entered all 4 legs same time and made my limit order in the midpoint and got filled in 5seconds.

target exit is when the $1.75 premium has decayed to about 90cents or so.

I don't do iron condors often but the tastytrade guys have some solid numbers to back up the methodology. so for a one lot at EXPIRATION my max risk is $3.25, max profit is $1.75 but again will be exiting sooner based on their research. my go to trades are diagonal spreads( a deep in the money LEAP call and selling weekly/monthly upside calls) and also cash secured put sales. but will incorporate some iron condors and increase lot size with experience. let me know what you think.

$FB calender roll and the unusual options activity

6 Dec - read the comments from the bottom... my final comments on "unusual options activity" type twitter posts and CNBC hits is that if you are following along looking for a 5-10 bagger and / or are expecting a big winner at options expiration you are likely to have a loss like the Dec6 205 Facebook calls from below...INSTEAD if you are going to follow along, take some profits after 25-50% winners but be careful you don't twist your ankle jumping off the bandwagon. at least sell enough of the position to get your money back and let the rest run.  I use the information as another tool in the toolbox for selecting strikes, maybe to chose a different strike, or maybe to not make the trade. I don't follow just because Jon / Pete / or a twitter subscription seller posts it. If I'm in the position I'm more likely to sell the option they are highlighting since the heard that follows along will push up the price.



26nov update- posted that I closed the short 200call at .40 today at 75% of max profit... so that gets me started about the "unusual options activity" comments. now giving everyone the benefit of the doubt that maybe they took profits or didn't tweet an entry or exit... this is prime example of why I don't break my ankle jumping on the unusual options activity bandwagon.. I listed below that Pete noted the options activity, the Dec6 205, want to say at $1.25 or $1.35 going off memory. as I type now after hours those are priced at .55... for shits and grins a day or two ago I looked at their price and high of day was $1.85 so I guess you might have captured a decent percentage gain if you had the discipline to exit. my assumption is that profit targets where started at a 50% winner to start exiting the trade or the CNBC viewer crowd that was piling into the position after the on air mention were expecting a rapid move thru 205 to get the 2-3bagger.. Bang! like Doc J says. so I'm assuming those buyers are showing a loss now. like I've said before I think as many false positives happen if you blindly follow the unusual activity metric. the twitter hero's that also follow this or have their own subscription service will also cling to ANY unusual activity even from months prior to claim the activity foreshadowed the stock move. I'm going to stick to my method of just filing away any usual activity and possibly using the info to help determine a strike vs following along with the activity outright.


22Nov - been working the FB calendar spreads pretty good last few weeks. had the short 197.50 calls, rolled those to next weeks 200s for a small credit. i dont religiously follow unusual activity like Doc J and Pete and several on Twitter if follow. I think the activity gives as many false positives as outright winners plus the heard effect of the CNBC viewers piling into whatever gets mentioned runs the price up a bit. I take the info and put it in the toolbox with everything else.

So Pete mentions unusual activity at the dec205 calls. now the stock doesn't have to blow thru 205 to make money, just heading in that direction causes the option price to increase and will get a nice percentage gain just off that. I was considering rolling my 197.50s to next weeks 197.50s for a larger credit. bring in a bit more than usual expecting the much anticipated correction everyone is looking for.

so in this instance im using Petes info as an assumption that the stock will go up a bit towards 205, thus why fight the heard, I rolled the short call up to try to keep stock from blowing thru my short strike. im ok with this keeping in mind my underlying long DITM 2021 call is gaining in value.

Point being, im using the unusual options activity not by following the crowd but by helping me decide where to roll my short calls. the Najarians seem to have a good thing going so more power to them, im just not fast enough to follow nor will I subscribe to a service. The twitter heros always point out how the large options activity preceded the move but never mention the ones where nothing happened

heres the segment on fastmoney halftime with the unusual activity
https://twitter.com/HalftimeReport/status/1197581270756286464?s=20

$AAPL short put entry

3 dec/4dec - the dec6 265 short call at $3.15 from 22nov... closed that at .44 on 3 dec and resold it at .80 today 2 days till opex. I know its just a few bucks but its some gas money. Sold the dec13 265 short calls at $2.35 for the IRA (35 delta). best case stock moves up a bit and I roll the weekly 265 to next week for credit. (still holding the Dec13 257.50 short puts) to back into a short strangle. so $2.50+ in profit on the short call, lowers the cost basis of the DITM call



nov22 update: on top of the long deep in the money LEAP call and the 257.50 puts I sold below I sold the dec6 265 call, 14days out and 41delta. sold for $3.15. the premium seemed a bit higher than recent. thought process was as such: obviously stock cant be above 265(the short call) and below 257.50 (the short puts) at same time so at least one of them will be a winner. essentially turned this position into a 257.50/265 strangle. I intentionally chose the same opex as the short puts.

at opex the following scenarios:
1- stock is below 257.50(255.40 effective), the short call expires at max profit, and I roll out the short puts. further subtract out the call premium gives me an effective price of 252.25.
2- stock is above 265 (268.15effective), the puts expire at max profit, my LEAP gains in value, and I close out/ roll out the short call
3-stock is between 257-265, both puts and calls expire at max profit for total gain of $5.25(short put and short call premiums added together)

sentiment on CNBC still is leaning cautious expecting the eventual correction, so I picked the first out of the money short call strike of 265 to get more premium if the correction occurs and went to the second week out vs the next weekly. if you have the thesis of "im already long and would like to add to the long position and generate some income while waiting to add" then this works for you. good to use if you start with a half position at some point and are willing to add more later. my "long" position is the existing Jan2021/Jan2022 deep in the money calls. you could do same thing if you were long the stock instead of the LEAPs




Nov 20- sold some cash secured puts today in $AAPL, and of course 4 minutes after fill the news about possible phase 1 trade deal maybe being delayed comes out so could have filled at lower strike of 50%higher premium. IV on the stock is not much so not much premium to be had without going out to longer dated strikes. again rule number one is that I only sell puts in stocks im ok owning if I get forced to buy the stock. so today with stock near 263ish

Sold dec6 257.50 puts at $2.10, delta 29, IV21 (green arrow)

we are all drawing the same lines on the chart and see a possible trend break coming. I have existing diagonal spreads on AAPL as well. 16days till opex on this sale, effective price if put the stock would be $255.40 which is near the trendline support.

if stock pops for some reason next few days and I get to 50% of max profit I will take profits and await the next set up.since I have diagonal spreads as well, im really selling strangles (selling upside short calls, selling downside short puts). having the deep in the money call keeps me from having undefined upside risk.

$TSLA diagonal spread

6 dec - saw the stock up 6bucks Premarket so cancelled GTC order and instead raised the strike and sold the Dec13 345call at $3.20-$3.40 (reg and IRA accounts) with stock at 337ish, 32 delta on the short call. still holding the long DITM Jan2021/2022 calls


4Dec - stock held up as market sold off and with 2days left till opex closed the short call at .95ish today, at 70% of max potential profit. entered a GTC order for the Dec13 342.50 calls at $4.00+, should fill if stock moves up a few bucks. GTC order since ill be away from computer for a bit, this $2.00+ profit reduces cost basis of the DITM call


2Dec - didn't get the recovery for the ratio spread to work out so on to the next week, so on Dec2 sold Sold weekly 340 call at $3.20 to reestablish the diagonal spread $tsla

Going off memory stock was 333 area. trying to bring in couple hundred a week via the short calls.



Nov 22

we all know the story with the tesla truck reveal with the Mandalorian armor. here is how to im trading my position. stock dropped to 333 or so, down 25. of course the short call from below drops to near max profit. closed at .03. With big down moves I look to enter into ratio spreads, also called catch up spreads. you buy one upside call, sell 2 higher calls against your long stock or long DITM option. with stock at 332area

Bought nov29 335 call, sold 2 of the 342.50 calls for .55 credit. 

this trade sets me up for a potential reversal. this trade will be profitable between 335-350 at opex and my underlying DITM call gains as well. so you get upside leverage. max profit would be at opex at 342.50 of $750.

If I can time it I generally prefer to sell upside calls on up days not down. that's why I did not resell a short call to get back into the diagonal spread. this position is just for next week (I get .55 in credit to wait it out the week) , reevaluate after that. best case stock rebounds a bit, close this portion out for profit, resell a short call higher. again my LEAP is 2022 so ive got all 2020 and 2021 to trade around it. volatility is expected. note that the short call from 20nov was 99% max profit, lowering the cost basis of the long call. I chose my ratio strikes based on getting to near zero in cost, credit is ideal but prefer near zero by picking at further out higher strike. a free trade essentially, but don't want to go too wide on the strikes to have to pay more than 25cents. just my principle.




Nov 20-entered into another Tesla diagonal spread today. im sure my entry will be marking the top, but what caught my eye today was the implied volatility (IV) of this weeks options. was in the high 60's. high IV means juicy premiums. usually have high IV right before earnings, dont know if its just the movement of the stock or the upcoming news about the electric truck but its elevated. diagonal spreads are my go to trade, some call it a poor mans covered call. so i entered the following:

bought Jan2022 275call at 133.00 ($13300), delta 74
Sold this weeks (exp in 2days) 360 call for $4.10 ($410), delta 31, IV 66

didn't really have a level to use to select the 275 call, was more looking to get in the mid 70s delta. a 74 delta means if the stock goes up a dollar, the call option goes up 74cents. the stock moves around a lot so with stock around 353 sold the short call for $4.10... 7dollars out of the money. so break even is 364.10 for short call to go out flat but im gaining on the long call same time.

ideally would like to sell weekly upside calls in the 30-35delta range, at least $3-$4 premium is what im looking for. strategy is to collect consistent income, just like owning the stock and selling covered calls. im prepared for a lot of movement up and down of the stock. since the long call is out to 2022 there is no pressure if it drops on a general market selloff. if the stock moves up all the better as I chip away at the cost basis with the steady short sales.

as far as the electric truck and living in Texas and owning two F-150s myself, I see this as a niche market. seems that part of owning a truck in Texas includes getting it lifted, tires, rims (the small penis package), but what is missing is the engine noise you see from the douchebags with the lifted F-250s. but im sure some hipsters will want one trying to score some cool points. not realizing that unless you drive a Ford, Chevy, or Dodge truck there are no cool points to be had. sorry Nisan / Toyota owners but you don't think of Japan when you think of trucks.

I have spoken

forgot to add that Mike Khouw had a segment on Fast money on tesla, same strike I was selling short, here is his hit

TSLA fast money clip