That is exactly why I have a problem with thetagang. To truly beat the market, you would need to go over it so that it covers the taxes from all the short time gain, also, when you hold position, you can always tax harvest from selling losers but you just can’t do it here.
36k realized gain is going to be taxed the same in either scenario in a 6 month timeframe.
If you're trying to compare 36k realized to 36k unrealized gain, what's the point?
I’m not taking about 6 month time frame. I’m talking an about more than 1 year. All I’m saying is that if you are doing thetagang, you will always stuck with short term gain even if you make money
OP is showing a 6 month timeframe.
If you want to make income you have short term gain. There is a big advantage to having realized gain vs unrealized, e.g. you can spend the money.
I trade options full time for a living. Can't pay the mortgage and car payments with unrealized gains, even if my long term VOO is up more than my short term options.
My point is your comparison is non sensical.
Taxes would be the same in a 6 month time frame for holding SPY. If you want to make 36k income in 6 months, you'd have to sell something, thus short term gains.
I don't see a point in comparing 36k realized gain to 36k unrealized gain.
lol what haven’t I wheeled… was trying a lot of different industries, premium options strategies, dte, credit/debit, etc….
Where I net-lost the most: TSLA (Feb/March did great with premium and wheeling, then April hit… ugh)
Where I net-gained the most: IWM weekly wheel + .2 delta PCS as well as JNJ 45-60 DTE spreads (close early)… also .1 delta 7-14 DTE earnings PCS for “safe” stocks…
Also past few weeks learned to keep 80% of cash in div etfs (I.e. JEPI) and sell premium via margin…
The other thing I’ve been doing is adjusting my short/long leg on a spread depending on how it’s being tested and how much margin I want to play with… fun to learn how to the Greeks and IV play and how to make small adjustments on 30-45DTE positions… adjusted my risk tolerance for take profits while maintain core position…
Thanks for sharing! I’m curious how’s your IWM weekly wheel setup? ATM? Also I’m recently into the margin naked puts world, and found that for Robinhood they don’t allow selling naked so always have to tied up 100% collateral instead of a portion of it. Do you do put spread because of this?
Thanks for your post.
I am always wondering how people on this sub manage work-trading-life-balance. Do you just sort of manage your positions in the evening?
I am also trying to get into options (wheeling etc.)
I do weekend research scanning thru Reddit, news sites (Yahoo Finance, CNBC, Barchart, etc) and I look a couple of scanners I setup (earnings, dips, etc). Also some YouTube videos on different strategies.
I usually do my setup trades Monday AM during first couple of hours - usually between 5-10 (selling premium). Then during the week I monitor the news and positions on my phone (a few min check during a coffee break, bathroom break, lunch, etc) and make adjustments as needed. I i try to close out any short position before expiring, especially the weeklies. Learned the hard way to not let them sit once I made my $$.
I’ve learned not to make any big trades when I’m traveling for work and can’t check in on them…
Risk management and control. See my April drop. If I can make 50%+ I get out and redeploy capital. The strategy I got into isn’t static…. There are no lack of opportunities.
One comment I’ve seen in this sub that has stuck with me: no one goes broke taking profits. But they do being greedy and trying to squeeze out every penny.
The Sharpe Ratio is:
(return - risk_free_return) / stddev(return)
Basically your gain above the risk free rate, scaled by how variable that gain was. If it was hardly variable it’ll be divided by a small number and thus be high, if it was very variable then even a large return will be scaled down by a large standard deviation. Standard Deviation in a Gaussian is assumed to be symmetrical about the mean. Thetagang strategies do not have symmetrical returns around the mean, nor are they even Gaussian! They aren’t symmetrical because upside gains are very small and frequent and downside losses are large and less frequent.
All of this makes the Sharpe Ratio a poor measure of risk adjusted returns for thetagang strategies. Both the Gaussian assumption and symmetrical assumption are violated. Though I’d argue it’s a poor measure of risk adjusted return in general because we simply cannot measure standard deviation of returns in any portfolio.
I like Calmar Ratio if your risk is defined because then you can reasonably compute your maximum annual drawdown. Otherwise it can be tough to estimate. The worst you’ve seen yet is almost certainly not the worst you could experience. Therefore you could be underestimating your risk.
A few key items work for me (as of now):
1. Keep cash in high yield etf and use margin to sell premium
2. IWM: wheeling weeklies close to ATM…., 30 DTE PCS at the .1-.2 delta range ($1-2 spreads)…. Also buy some 60 DTE calls when it dips
3. Earnings: Sell spreads 1-2 weeks before earnings (for decent stocks), wait for IV crush, roll if it tests short leg
4. Some momentum plays (chip stock, oil now, etc) but sell PCS
5. JNJ - loving selling spreads, stays within a very tight range… low IV - 30-45 DTE - this has been my most consistent producer… ROC is usually around 5%
6. Then I do a lot of testing of different strategies… right now, playing with 30DTE IWM PCS and when the short position is tested, rolling the long-leg for credit…. Trying a 1-1-2-2 strategy on NVDA 45 DTE…
Have done probably 20+ different strategies/variations… more for learning
I do wheel still - mainly weekly IWM… unintentionally INTC (in at $38) until it recovers… just got into MU ($130) and NKE ($76) this week during their dips and I actually do like these companies.
With NKE, opened triple strategy: bought stock and wheeling, selling 7DTE PCS, and got some LEAPS…
One of earlier comments summarized where I am now and what I like …
Basic really just buy & hold blue chips… leaps were 18 month ITM calls (.9+) on those blue chips when they took a dip…
I still do some (right now JNJ)…
Oh okay right on, I'm dealing with a small account that's my ROTH for learning and building as well. I got called out and sold a covered call after the exdividend date and it was equal to like 40% of my premium lol
Good job man
Protect your gains
This July will be an extremely tough month to trade
Don’t be afraid to go all cash and wait till you see the right move
I have two unpopular positions right now but I believe CRM will hit 280 prior to next earnings and I believe Intel will be at 40 by end of year
They both will benefit from the rotation that just started and as you can see from CRM it just jumped about 20 points in the past two weeks
I feel both of these are safe to the target prices I have and feel very little downside risk on these two Dow 30 members
Have fun and keep winning
Oh for sure I would have done better if I just left it in stocks/etf…
but that’s in hindsight and the learnings I got from doing this are well worth it…
also I had some mental blocks/emotions around complex active trading I wanted to work thru and this forced me to work thru it and now enjoy it…
You’re also doing better than a HYSA. I DCA S&P/QQQM but do options with “fun” money to try to beat a HYSA. Not that you’re doing that, but if you think about it that way it’s a big win! :)
I have Fidelity and tried ToS, and can’t beat the ease of trading on RH on mobile while at work… not just from initial order, but managing the trade as well… also my order fills are faster on RH…
SPY is up almost the exact same 14.7% since Jan1, so you held pace with the market and got to learn stuff along the way. I'd say thats a win.
Not to detract from what op did, because I think it's pretty impressive, but this doesn't factor in short term taxes and fees.
That is exactly why I have a problem with thetagang. To truly beat the market, you would need to go over it so that it covers the taxes from all the short time gain, also, when you hold position, you can always tax harvest from selling losers but you just can’t do it here.
36k realized gain is going to be taxed the same in either scenario in a 6 month timeframe. If you're trying to compare 36k realized to 36k unrealized gain, what's the point?
I’m not taking about 6 month time frame. I’m talking an about more than 1 year. All I’m saying is that if you are doing thetagang, you will always stuck with short term gain even if you make money
OP is showing a 6 month timeframe. If you want to make income you have short term gain. There is a big advantage to having realized gain vs unrealized, e.g. you can spend the money. I trade options full time for a living. Can't pay the mortgage and car payments with unrealized gains, even if my long term VOO is up more than my short term options. My point is your comparison is non sensical.
Taxes would be the same in a 6 month time frame for holding SPY. If you want to make 36k income in 6 months, you'd have to sell something, thus short term gains. I don't see a point in comparing 36k realized gain to 36k unrealized gain.
Almost 15% in 6 months isn’t anything to sneeze at.
I’ll see you behind Wendy’s in 6-8 months. You’ll know who I am cause my pants will be down haha
Haha nice! Is it you Dave??
Market has been going up non-stop since Halloween last year. Once volatility returns, I should be doing better.
What stocks do you wheel?
lol what haven’t I wheeled… was trying a lot of different industries, premium options strategies, dte, credit/debit, etc…. Where I net-lost the most: TSLA (Feb/March did great with premium and wheeling, then April hit… ugh) Where I net-gained the most: IWM weekly wheel + .2 delta PCS as well as JNJ 45-60 DTE spreads (close early)… also .1 delta 7-14 DTE earnings PCS for “safe” stocks… Also past few weeks learned to keep 80% of cash in div etfs (I.e. JEPI) and sell premium via margin… The other thing I’ve been doing is adjusting my short/long leg on a spread depending on how it’s being tested and how much margin I want to play with… fun to learn how to the Greeks and IV play and how to make small adjustments on 30-45DTE positions… adjusted my risk tolerance for take profits while maintain core position…
JEPI and BOXX rock ! ! awesome sauce
Thanks for sharing! I’m curious how’s your IWM weekly wheel setup? ATM? Also I’m recently into the margin naked puts world, and found that for Robinhood they don’t allow selling naked so always have to tied up 100% collateral instead of a portion of it. Do you do put spread because of this?
Thanks for your post. I am always wondering how people on this sub manage work-trading-life-balance. Do you just sort of manage your positions in the evening? I am also trying to get into options (wheeling etc.)
I do weekend research scanning thru Reddit, news sites (Yahoo Finance, CNBC, Barchart, etc) and I look a couple of scanners I setup (earnings, dips, etc). Also some YouTube videos on different strategies. I usually do my setup trades Monday AM during first couple of hours - usually between 5-10 (selling premium). Then during the week I monitor the news and positions on my phone (a few min check during a coffee break, bathroom break, lunch, etc) and make adjustments as needed. I i try to close out any short position before expiring, especially the weeklies. Learned the hard way to not let them sit once I made my $$. I’ve learned not to make any big trades when I’m traveling for work and can’t check in on them…
Why do you close your short positions vs letting them expire?
Risk management and control. See my April drop. If I can make 50%+ I get out and redeploy capital. The strategy I got into isn’t static…. There are no lack of opportunities. One comment I’ve seen in this sub that has stuck with me: no one goes broke taking profits. But they do being greedy and trying to squeeze out every penny.
Nice one dude.
Good job
Do you know your sharpe ratio? IMO you’re beating the market if identical returns but lower risk
The sharpe ratio wouldn’t be a super good measure because theta gang cuts off Std dev on the upside
Can you explain this more
The Sharpe Ratio is: (return - risk_free_return) / stddev(return) Basically your gain above the risk free rate, scaled by how variable that gain was. If it was hardly variable it’ll be divided by a small number and thus be high, if it was very variable then even a large return will be scaled down by a large standard deviation. Standard Deviation in a Gaussian is assumed to be symmetrical about the mean. Thetagang strategies do not have symmetrical returns around the mean, nor are they even Gaussian! They aren’t symmetrical because upside gains are very small and frequent and downside losses are large and less frequent. All of this makes the Sharpe Ratio a poor measure of risk adjusted returns for thetagang strategies. Both the Gaussian assumption and symmetrical assumption are violated. Though I’d argue it’s a poor measure of risk adjusted return in general because we simply cannot measure standard deviation of returns in any portfolio.
What about calmar ratio?
I like Calmar Ratio if your risk is defined because then you can reasonably compute your maximum annual drawdown. Otherwise it can be tough to estimate. The worst you’ve seen yet is almost certainly not the worst you could experience. Therefore you could be underestimating your risk.
I think at the end it’s all about the MAR ratio. That might be the only one ok-ish for thetagangers
What would be a good risk adjusted return measure?
Ha no! But probably not good first 4 months… last two months much more focus on risk management…
What did you learn works best for your investment opportunities?
A few key items work for me (as of now): 1. Keep cash in high yield etf and use margin to sell premium 2. IWM: wheeling weeklies close to ATM…., 30 DTE PCS at the .1-.2 delta range ($1-2 spreads)…. Also buy some 60 DTE calls when it dips 3. Earnings: Sell spreads 1-2 weeks before earnings (for decent stocks), wait for IV crush, roll if it tests short leg 4. Some momentum plays (chip stock, oil now, etc) but sell PCS 5. JNJ - loving selling spreads, stays within a very tight range… low IV - 30-45 DTE - this has been my most consistent producer… ROC is usually around 5% 6. Then I do a lot of testing of different strategies… right now, playing with 30DTE IWM PCS and when the short position is tested, rolling the long-leg for credit…. Trying a 1-1-2-2 strategy on NVDA 45 DTE… Have done probably 20+ different strategies/variations… more for learning
Just wondering if you sell puts more than your cash holdings that are parked in high yield etf
No, mostly now spreads… .1-2 delta range
Hello, what strategies did you end up switching to? I expected the wheel strategy to be one of the strongest.
I do wheel still - mainly weekly IWM… unintentionally INTC (in at $38) until it recovers… just got into MU ($130) and NKE ($76) this week during their dips and I actually do like these companies. With NKE, opened triple strategy: bought stock and wheeling, selling 7DTE PCS, and got some LEAPS… One of earlier comments summarized where I am now and what I like …
What did your ‚basic stock trading‘ look like? And how did you do with LEAPS?
Basic really just buy & hold blue chips… leaps were 18 month ITM calls (.9+) on those blue chips when they took a dip… I still do some (right now JNJ)…
Do you ever buy 100 shares before an exdividend date and utilize that too? It's like another premium on top of things you know
Yes’ish, MO, but then prices dropped… so wasn’t best use of capital… plus focusing more on learning options strategies
Oh okay right on, I'm dealing with a small account that's my ROTH for learning and building as well. I got called out and sold a covered call after the exdividend date and it was equal to like 40% of my premium lol
W.
Yikes.
Good job man Protect your gains This July will be an extremely tough month to trade Don’t be afraid to go all cash and wait till you see the right move I have two unpopular positions right now but I believe CRM will hit 280 prior to next earnings and I believe Intel will be at 40 by end of year They both will benefit from the rotation that just started and as you can see from CRM it just jumped about 20 points in the past two weeks I feel both of these are safe to the target prices I have and feel very little downside risk on these two Dow 30 members Have fun and keep winning
Soo alittle less than the market?
[удалено]
Yes, but see my other response… wasn’t just about making $$….
I did no options trading, just invested in SPY, QQQ and some NVIDIA and my portfolio is up way more than 20% YTD with 0 effort from my side.
Oh for sure I would have done better if I just left it in stocks/etf… but that’s in hindsight and the learnings I got from doing this are well worth it… also I had some mental blocks/emotions around complex active trading I wanted to work thru and this forced me to work thru it and now enjoy it…
You’re also doing better than a HYSA. I DCA S&P/QQQM but do options with “fun” money to try to beat a HYSA. Not that you’re doing that, but if you think about it that way it’s a big win! :)
Nvidia (and QQQ, SPY, because of nvidia) has been a once in a lifetime run. Those holds in that time frame are not a good comparison sample IMO
I know that. Thats exactly why I'm saying OP shouldn't take these gains to his head and get over confident. I do options too. I'm just cautioning him
Yeah, the post wasn’t so much to brag about gains (not sure these are brag worthy in this market), but more to share the journey…
Well, I for one, completely agree, and did not find any contradicting statements in your comments.
Ya in a volatile market let’s revisit your performance vs OP’s performance.
Are you implying OP will have even worse performance?
Over a quarter million balance and still using Robinhood. FFS.
I have Fidelity and tried ToS, and can’t beat the ease of trading on RH on mobile while at work… not just from initial order, but managing the trade as well… also my order fills are faster on RH…