September was quite the roller coaster ride for options income.
One week I was up $15,000 and a couple of weeks later I was in negative territory.
It’s amazing how fast options can sway into profit or loss. 😅
I’ve been experimenting with some new strategies recently so any temporary loss will be a lesson for me, lol.
Here is basically a graph representing the accumulated profit/loss from my option trades throughout the month. As you can see it is quite choppy. 🙂
What caught me off guard in September was the vicious decline in stocks. It was the biggest monthly fall in the stock market since March of 2020, which was more than 2 years ago.
I had to roll a lot of weekly trades to not lose money. However, in hindsight I would have been better off just taking the losses.
Going forward instead of trying to be bearish or bullish, I will be more neutral with my trades. Picking a direction, especially short term can be really difficult.
Overall I’m glad September ended with a net credit with my trades. I did pay over $1,000 in trading commissions which is not ideal. But so far it looks like IBKR is still the most cost effective way to trade options.
I’m still trying to find a strategy that can be successful no matter what kind of market we’re in.
Something that’s been helping me is keeping an eye on multiple indexes to gauge where the market might be moving. I look at…
- QQQ – Tech heavy
- SPY – Large cap
- IWM – Small/mid caps
By using all 3 I have a better understanding of overall market sentiment and can make better decisions about whether to buy or sell an option. For example, if only 1 or 2 indexes are showing signs of weakness, then I have less conviction about a bearish trade. And if all 3 indexes are showing relative strength on the same day then I’ll be more willing to make a bullish trade. 🙂
My focus now in October is trying more short term strategies like 0 day to expiration vertical spreads. This basically removes overnight risk so I don’t have to worry about the next day. I look forward to see how these types of trades play out.
Random Useless Fact:
Cooking often requires improvisation.
Now I know why some restaurants serve hamburger steak!
Ah yes, the hamburger steak. It’s a great alternative if you want to eat steak but can’t afford the real thing, lol.
When you are reporting your income, is that gross or net of commissions?
Imagine you were trading options with one of the big 5 or even questrade for that matter?
Also how much margin space do you have in this account, if you don’t mind me asking?
It’s net of commissions. Usually I have a table listed with individual transactions, but there were too many trades this month to put together. I currently have $70K available margin left. This number typically varies from $30K to $100K depending on market conditions.
Sometimes I do 0 DTE trades that only ties up capital for a single day. The money is then released at the end of the day when the option expires.
Here’s an example today where I made $700 with 1 trade. 👇
Hi Liquid, thank you for sharing, good job in Sept!. “in hindsight I would have been better off just taking the losses”. How do you know? In a QQQ bear call spread for instance, what do you do if only the option you sold ends up in the money and the one you bought at a hgher strike expire worthless? Would you take overnight risk and start the next day with a short position in QQQ that you got assigned?
When I roll short duration options into the following week I risk the underlying moving more against me, in which I’ll be even more in the red than just closing my position and taking a realized (but smaller) loss. This happened with my Adobe bull put spreads for example.
I sold at $300
I bought at $295 for protection.
The stock ended the week at $299 or something.
I rolled it down to $295/290 expiring the following week, but the stock fell to $285 haha.
A long position is not fun to hold when a stock is falling.
In the case of a bear call spread on QQQ, if the option I sold is ITM, but the one I bought expires OTM, then only the sold option will be exercised. And the next day I will have a short position of the underlying. This happened when I sold 5 naked calls on AMC. I eventually had -500 shares. Luckily AMC stock fell the following week and I closed my position by purchasing the shares back at a cheaper price. 🙂
Got it 👍thank you.
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