Hedging the wheel

BKR88 said:
Less confusion if you close your long TQQQ position and keep MNQ out of your plan.
You're short a naked call either way.
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If there isn't a MNQ short, this isn't a naked call. A naked call is when you don't own the underlying. Please study more before commenting.
 
markthepadrone said:
You might be overthinking this. Here is the trading plan.

1. I'll sell cash secured weekly puts on the 3x bull index etf TQQQ at a 30 Delta strike. I'll sell when the market dips on mid day Monday. If there isn't a dip mid/late day Monday, the risk of assignment is too high and I'll wait till the next week. I'll repeat this process each week until I get assigned. The object here is to simply collect the premium credit without getting assigned. I'll generally hold till they expire at the end of the week.

2. If I was assigned, I'll open a short position in MNQ at the rate of, as of now, 1 contract for every $60k (5 x $11,958) of TQQQ I'm now holding from the assignment. This is then a 0 Delta balance to 'lock' the position so if the market continues to drop, my position will hold value, within reason. I 'locked' the position so I can now sell covered calls against my TQQQ holdings.

If TQQQ rises to near my cost basis, the price I was assigned at, I'll buy back the MNQ short at nearly what I sold it for. I'll set a standing order to automatically buy back MNQ if the P/L hits 0. I'll never hold the MNQ short if TQQQ is at or above my cost basis. The point here is to collect the premium credit from selling 30 Delta weekly calls. If the market falls, the MNQ short allows me to sell calls at a strike below my cost basis by offsetting the difference between my assignment price and the strike I'm selling.

I'll sell the calls Monday mornings when the market is peaking for max credit. The latest I'll sell is Tuesday because I don't want to give up too much Theta. I'll generally hold till these expire. I'll keep doing this until my TQQQ gets called away.

3. If my TQQQ got called away, go to step 1.

The idea is to make money from the credits without really caring what the 'price' is doing. This all sounds like chasing pennies, but it actually adds up faster than you think. 2% per week is a 100% per year. And yes, I know we've all trophy trades where we make bazillions, but I'll bet you gave most of it back over the time that followed.
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What's the reasoning for not just rolling duration on your short put?
 
IronFist said:
Can you elaborate on this? It sounds like a sort of "would you rather be right or happy?" which is what my narcissist mother says to me to try and agree with her when she is wrong. Whenever I hear this my bs detector screams.

I do not understand how this is applicable in trading.

How can you make money if you're wrong? How do you make money being long if value is dropping? Trading is predicting. How can you make money wrong?
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Trading is not predicting. Gambling is predicting.
You people try to guess which way the market is going. I'm just selling time.
 
markthepadrone said:
If there isn't a MNQ short, this isn't a naked call. A naked call is when you don't own the underlying. Please study more before commenting.
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If you short MNQ to offset you're canceling out the movement of TQQQ so your only exposure is the short call.
Rather than short MNQ you should just sell your long TQQQ as that will leave your short call as the only exposure.
Your risk/rewards is the same yet it's less confusing to bring in another instrument.
 
markthepadrone said:
Trading is not predicting. Gambling is predicting.
You people try to guess which way the market is going. I'm just selling time.
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What a dumbass thing to say. "Just selling time"? As if a sharp price move can't kick your ass?

Dude, I get that you're irritated by people not agreeing with you, and that you believe in what you're doing; that's fine, keep your head down and keep ignoring the risks. They'll bite you in the ass and "explain" this shit to you better than anyone else could. But don't play these stupid games about how you're "just" doing this or that with no risk, or try to wave your minuscule testicles around by boasting about the "real" money that you trade; there are people here who can buy and sell your kind by the gross for pocket money.
 
BlueWaterSailor said:
What a dumbass thing to say. "Just selling time"? As if a sharp price move can't kick your ass?

Dude, I get that you're irritated by people not agreeing with you, and that you believe in what you're doing; that's fine, keep your head down and keep ignoring the risks. They'll bite you in the ass and "explain" this shit to you better than anyone else could. But don't play these stupid games about how you're "just" doing this or that with no risk, or try to wave your minuscule testicles around by boasting about the "real" money that you trade; there are people here who can buy and sell your kind by the gross for pocket money.
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Please help me.

Explain how a sharp price move will kick my ass.
 
BKR88 said:
If you short MNQ to offset you're canceling out the movement of TQQQ so your only exposure is the short call.
Rather than short MNQ you should just sell your long TQQQ as that will leave your short call as the only exposure.
Your risk/rewards is the same yet it's less confusing to bring in another instrument.
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"You're short a naked call either way" Do you actually know what you're typing or do the words just fall out of your butt?
 
BlueWaterSailor said:
Dude, I get that you're irritated by people not agreeing with you, and that you believe in what you're doing; that's fine, keep your head down and keep ignoring the risks. . .
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No. I'm not irritated by people that don't agree with me. I'm irritated by people that choose to disagree with me without fully understanding what I'm saying. They just jump out of the box disagreeing like little spoiled children.
 
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