Congrats, that looks really good. Very little drawdown relative to the gains. It's interesting that most of your gains appear to happen during 2 very short periods of time. It looks like you gained about 25k during a period of less than one week last December. Then it looks like you gained another 25k during this past week. So that's about 50% of your total gains over the 1 year period happening in 2 period of about a week each. Any idea what accounts for that? Nice work though. Looks like you have found a very profitable system that works in any market condition (well, I don't know that for sure, but I don't see any effect of the recent ~15% drawdown in Nasdaq in your P/L). I wish I knew more about your strategy of trading long duration deep OTM options. Not sure how you're able to generate a profit trading options at levels not seen in years at about a year out in duration, but seems to be working for you. Curious about how you put the trades on. Do you get filled on part of the total position (unhedged, but low delta) and then try to get filled on the other part to make the position fully defined risk and lock in a profit? Essentially taking on only execution risk? Understand if you can't disclose that. Nice job in any case.
High Probability Options Trading Journal
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Congrats, that looks really good. Very little drawdown relative to the gains. It's interesting that most of your gains appear to happen during 2 very short periods of time. It looks like you gained about 25k during a period of less than one week last December. Then it looks like you gained another 25k during this past week. So that's about 50% of your total gains over the 1 year period happening in 2 period of about a week each. Any idea what accounts for that? Nice work though. Looks like you have found a very profitable system that works in any market condition (well, I don't know that for sure, but I don't see any effect of the recent ~15% drawdown in Nasdaq in your P/L). I wish I knew more about your strategy of trading long duration deep OTM options. Not sure how you're able to generate a profit trading options at levels not seen in years at about a year out in duration, but seems to be working for you. Curious about how you put the trades on. Do you get filled on part of the total position (unhedged, but low delta) and then try to get filled on the other part to make the position fully defined risk and lock in a profit? Essentially taking on only execution risk? Understand if you can't disclose that. Nice job in any case.
Thanks. In terms of large occasional gains, that's partially due to lack of time to focus on trading and lack of abundance of opportunities, just sometimes I find a lot of good stuff so I focus on picking top trades, load up on positions to the point of maxing out my margin, then have to wait a few weeks for some options to expire, or for profit and liquidity to show up so that I can exit. But, that was in 2021. In 2022 I didn't find many opportunities initially, so I focused on my machine learning system and found new types of strategies, focused on improving those, then started trading them just recently and some positions quickly showed profit (TSLA and SBAC, also HD on the way down), but my volatility is increasing and I foresee larger drawdowns if I stick to this method, so this is a bit of live testing. Then when the market started dropping, I've also added QQQ trades (put combos) that I found and traded manually for several years during such volatility, so that's yet another source of profit that just came on the spur of of the moment and due to opportunity showing up.
If I focused on trading full time and had all my tools ready and available then I probably would be able to have quicker turnaround and more consistent gains. But I'm actually spending most of my time on building those tools for future use. Recently I've finalized a system that comes up with 5K-100K trade ideas each day, and I have to spend a lot of time browsing through them, reviewing in ToS, trying to get fills on some, etc - all this takes a lot of time, and away from my other tasks, but at least now I have access to look at those trade suggestions whenever I feel like it, and may increase my activity if I find enough stuff that works and allows quicker rotating in-and-out of trades. At the same time, all this gives me ideas on how to build the best possible software to trade options and manage my positions, which may also result in some product for everyone else in the future, maybe even free. My attention is just so split between different tasks that each of my projects looks like this - sudden bursts of progress.
Oh, and the recent profit jump is a bit of visual trick so I posted it like a furu, just because it looked so nice. Basically TDA, again, is miscalculating my DOTM option values, and I think it really falsely jumped just in the last few days. I may be back down to $280K in a few days. I also see that now I'm losing money when the market goes up, so I have to figure out how to hedge to the upside, or exit on the way down, but poor liquidity makes it difficult, especially when the profit may be only $100-$200 on some complex positions.
I should also make money on the way up if the market starts getting seriously bullish, just the recent range-bound market, and my new/additional strategies, make it difficult to manage all those positions, even when I do see my account actually go up overall.
I should also make money on the way up if the market starts getting seriously bullish, just the recent range-bound market, and my new/additional strategies, make it difficult to manage all those positions, even when I do see my account actually go up overall.
Just a quick update:
In theory I'm doing OK because the account is holding up in this nasty environment, but in practice I could do much better. For example I had $10K+ profit on TSLA and couple other underlyings in April but didn't take those in time. They practically started going down the day I set orders to exit those positions, but I decided to wait for them to recover a little after they went down, in the end never realizing the profit.
I also underghedged, forgot to hedge, or hedged too late on couple underlyings.
Finally, I've lost a few $K on AMZN due to stock split and getting margin call from TDA due to having 900 cheap OTM options (as various combos) on AMZN pre-split that turned into 18,000 options after the split. I didn't realize that each option carries minimum $37.50 margin, so my margin went through the roof and I had to close most of them, at a small loss.
I'm also learning and fine-tuning some new options strategies that I just started trading this year, while not having much time due to other tasks & projects.
TDA, as usually, is unable to properly estimate option values, using only mid prices, which fluctuate quite a lot from day to day. Though I think they do smooth them out a little after hours, because my balances look even more out of whack during the day.
In theory I'm doing OK because the account is holding up in this nasty environment, but in practice I could do much better. For example I had $10K+ profit on TSLA and couple other underlyings in April but didn't take those in time. They practically started going down the day I set orders to exit those positions, but I decided to wait for them to recover a little after they went down, in the end never realizing the profit.
I also underghedged, forgot to hedge, or hedged too late on couple underlyings.
Finally, I've lost a few $K on AMZN due to stock split and getting margin call from TDA due to having 900 cheap OTM options (as various combos) on AMZN pre-split that turned into 18,000 options after the split. I didn't realize that each option carries minimum $37.50 margin, so my margin went through the roof and I had to close most of them, at a small loss.
I'm also learning and fine-tuning some new options strategies that I just started trading this year, while not having much time due to other tasks & projects.
TDA, as usually, is unable to properly estimate option values, using only mid prices, which fluctuate quite a lot from day to day. Though I think they do smooth them out a little after hours, because my balances look even more out of whack during the day.
For transparency: my 2022 (a year ago) ended negative for 2022, though still positive when counted from when my trading started in late/Sept 2021.
vs same period for SPY:
Notice that my P&L wasn't really correlated to SPY, just having steady growth and later steady decline.
Couple notes:
1. In mid 2022 I stopped getting fills on my favorite trades (the initial strategy), as I get most fills in bullish market or with specific skew type, even though it isn't related directly to a bullish vs bearish market, just the skew works in my favor in bullish market for my initial strategy and it's easier to find trades I need. Basically the strategy stopped working due to lack of fills. So I was looking for a new strategy and experimented with totally new category of trades, which didn't work and simply decayed.
If these were strategies run at a trading firm then they'd see performance for one strategy, then separately performance for another strategy. I just switched it up in a single account because I didn't want to close it and reopen it, as well as I always experiment with new stuff anyway.
Generally we can say that my 2nd strategy didn't work. I knew I'm risking only the $profit I already made earlier, just allowed myself to fck it up. I still did care about not losing too much, so it's not like I went all in and lost it all.
2. I didn't want to post losses too soon for one specific reason: some furu named volswan or volatilityswan or whatever on Twitter saw some of the sample risk profiles for variance swaps (an options trade structure) I was tweeting, and messaged me that he reverse engineered my trades. Then he proclaimed how he improved my own trades (without telling me how). Then he announced in his Discord how he found an amazing strategy and will become a billionaire. So I wanted to punish the idiot (and others like him reverse engineering my stuff) and pretended that all is good and my latest strategy is indeed the most amazing one I ever found. Obviously didn't want to tell him how it sucks.
In the end this exact (losing) strategy contributed to me figuring out why it didn't work (takes practice) and how to reverse it properly to actually make money since it was losing so steadily and consistently. Consistency is one of the most important features of a great strategy, as long as you're on the right side of the trade (I was on the wrong side initially).
So there you go.
vs same period for SPY:
Notice that my P&L wasn't really correlated to SPY, just having steady growth and later steady decline.
Couple notes:
1. In mid 2022 I stopped getting fills on my favorite trades (the initial strategy), as I get most fills in bullish market or with specific skew type, even though it isn't related directly to a bullish vs bearish market, just the skew works in my favor in bullish market for my initial strategy and it's easier to find trades I need. Basically the strategy stopped working due to lack of fills. So I was looking for a new strategy and experimented with totally new category of trades, which didn't work and simply decayed.
If these were strategies run at a trading firm then they'd see performance for one strategy, then separately performance for another strategy. I just switched it up in a single account because I didn't want to close it and reopen it, as well as I always experiment with new stuff anyway.
Generally we can say that my 2nd strategy didn't work. I knew I'm risking only the $profit I already made earlier, just allowed myself to fck it up. I still did care about not losing too much, so it's not like I went all in and lost it all.
2. I didn't want to post losses too soon for one specific reason: some furu named volswan or volatilityswan or whatever on Twitter saw some of the sample risk profiles for variance swaps (an options trade structure) I was tweeting, and messaged me that he reverse engineered my trades. Then he proclaimed how he improved my own trades (without telling me how). Then he announced in his Discord how he found an amazing strategy and will become a billionaire. So I wanted to punish the idiot (and others like him reverse engineering my stuff) and pretended that all is good and my latest strategy is indeed the most amazing one I ever found. Obviously didn't want to tell him how it sucks.
In the end this exact (losing) strategy contributed to me figuring out why it didn't work (takes practice) and how to reverse it properly to actually make money since it was losing so steadily and consistently. Consistency is one of the most important features of a great strategy, as long as you're on the right side of the trade (I was on the wrong side initially).
So there you go.
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