Saturday, January 1, 2022

Comments for the New Year

 

1 jan 2022

ok, couple thoughts, nothing earthshattering. just a review of the last year off the top of my head. 

As i head into this new year "retired" at 54 from working, i look back and see i had my best year ever with the stock market. 99% being premium selling. im optimistic that now that i can devote the entire market day to whats going on i will be able to catch more opportunities i was unable to capitalize on because of actually working.. those intra day moves.

every year i tell myself to do more of what works and less of what doesnt. in 2009 after 10years on the job i was layed off during the financial crisis and didnt work for 3 years. just got all my Obama unemployment that i could and played stock market and then was able to return to homebuilding once the market turned. 

during those 3 years i was primarily selling credit spreads and admittedly not doing as well as i expected and in my personal life i had significant debt built up, taking advances on credit cards with the idea of paying them off with the profits going forward. got to the point where i was just making due and paying the bills. After returning to work i focused on work for the next few years with the occasional trade. also given the technology of the time it was still possible but not convenient to trade stocks during the day.. i bought an iphone 5 back in the day to be able to monitor prices.

 the difference between now and then after getting back into the market 3-4 years ago is that i stumbled onto the youtube videos from the TastyTrade team. starting watching 1-2 a day talking about probabilities, standard deviations, rates of decay difference between an in the money vs out of the money options, optimum entry and exit points, differences in trading between high and low IV... after absorbing all that info i looked back at those 3  years of trading after the layoff and wondered how i managed to not lose more. was clueless

my trading turned around just like that. i dont follow their mechanics 100% but it forms the basis for alot of my decision making. so i want to say i am a much better trader now vs then. i do entries and exits now i would not have considered back then. Thus i am confident going forward that 2022 will be profitable, just have the house note and 13K on one truck left as my legit debt.. Plus about $125k in 401K that will get rolled into my etrade IRA in a few weeks.

along the lines of do what has worked and stop doing what doesnt work. looking back, Put selling was the standout straightforward winner. as the year passed by i became higher and higher all in on TSLA and going off memory i was 30 for 31 profitable put sales on TSLA.. with the one loss just being a technicality of $100ish. my entries where pretty much under 20 delta and also looking back i could have gone a bit more aggressive on that delta.

some of my internet trader friends have iron condors dialed in but im under 50% wins on those.. even when i leg into it via selling credit spread, and days later selling the other side.. one side always seems to get tested causing me to defend the trade for weeks or months. its such an aggravation to roll over and over for pennies often to delay a loss trying to thread the needle at opex time . so despite the headline ease of the trade i will resolve to not do them.. tactically you can argue that they do take up some buying power that could be applied to a higher probability profitable trade . so theres that too

the short put selling has been the percentage winner but the shear monetary winner via how is it impacting the portfolio balance has been the diagonal spreads. buying 6months out to Jan2024 long calls as a replacement for the stock and selling short term (weekly/2weeks out) calls against for income. straight up just like a covered call. my personal goal has varied where i want to collect between $5000-$10000 a week in credit depending on how many long calls i have. a $10 credit per is a good starting point. i have noticed this year i am spoiled and have to check myself.. i catch myself mentally saying "that trade would only make $4000" this week. i have to put that in context of how much would i make for a month on the job and or that x52 weeks.. is $4000 bad for a week? big problems to have. So the diagonal spreads will continue

i huge part of premium selling unless you get whipsaw price movement is actually just waiting.. waiting on that premium decay. so its nearly a daily challenge to not have to do something. sell something, buy something.

although i have 10-15 stocks on my watchlist like i said im 99% in TSLA. i want to say that the advantage is i can put on multiple trades with high probabilities.. such as if i have short calls at 1000. i could add credit put spreads below that.. only one of these trades will be a potential max loss.

Surprisingly i see that when i entered long positions on big sell offs on those other stocks on my watchlist or at least stocks im someone familiar with, my win percentage is poor. ive reduced my losses considerably by entering via diagonals but all in all entering long via buying is a no go.. for me a Put sale or credit put spreads month or 2 out has been more successful. which is not a surprise since the whole Tastytrade thesis is that option selling is the way to go , not option buying.. not always but it lines up to what ive been doing.

Mechanically looking back my short call strike selections could have been a tad higher (higher delta). although when the stock has taken off , my short strike selection really didn't matter.. the stock (TSLA) moved 100's in a few weeks. but i will keep that in the back of my head. there is that balance between are you bringing in enough premium for just your general goals / bill paying and to offset the decay in your long calls

my "gut check" rule has served me well. "if the trade doesn't feel right in first 5 seconds i should pass" and my gut overrules any metrics or TA.

so just some random thought, not a to do list of resolutions but a refocus on what has served me well. the high probability entries, taking profits in a mechanical method and rolling based on daily changes in IV and theta i think has maximized the credit. 

Alec Baldwin in Glen Garry Glen Ross has that Alway Be Closing scene.. ive stolen that and made it Always Bring in Credit - ABC

if i continue to maintain focus it should be a very boring year but profitable





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