I am mostly out of AMRN because of a delayed binary event. AMRN applied for a label change to the FDA that would increase available market by a huge amount. Problem is that if the FDA does not grant label change priority review, AMRN stock could temporarily tank. If it does, the stock could sky rocket. Canada granted priority review, but US FDA is now political. I sort of hoped my last few hundred shares would have been called away Friday, but price missed by 0.25. Advantage of using your rolling strategy for biotechs is that selling put or calls generates 3% of share price per week each. I see politics as a problem with indices too so I am not sure what to do.
Selling Premium from a Macro Trader's Perspective
- Thread starter tnatrader
- Start date
The paradox of bull market corrections is that if you're wrong to be short-term bullish as a correction unfolds, your thesis appears stronger the bigger your losses get. Of course, if it turns out to be a severe correction/bear market, you look retarded. So basically this whole thing boils down to whether I'm a dumb dumb...
Looking back at this ongoing correction, my mistake was to wait for a rally before selling calls. In the future, when deciding that this is going to be a rangebound type of market (which I identified on May 21st), I have to be much more aggressive in selling calls. Holding the underlying in a choppy range is absolutely useless. I need to sell the calls to give me more "room" to sell puts. Lesson learned.
The upside is I'm down 1.5% for the past month while the overall broad market (ACWI) is down 5.5%. For reference, I took part in ~65% of the upside in Mar/Apr so 25% downside participation isn't terrible. Remember this is when my thesis was completely off-base. Imagine my performance if I'm correct next time LOL.
I'm still holding 77% net cash with ~70% exposure to the Qs. Looking to sell 1 put (1 strike OTM)/trade if we keep dipping and 2-3 atm calls tomorrow at the open.
Looking back at this ongoing correction, my mistake was to wait for a rally before selling calls. In the future, when deciding that this is going to be a rangebound type of market (which I identified on May 21st), I have to be much more aggressive in selling calls. Holding the underlying in a choppy range is absolutely useless. I need to sell the calls to give me more "room" to sell puts. Lesson learned.
The upside is I'm down 1.5% for the past month while the overall broad market (ACWI) is down 5.5%. For reference, I took part in ~65% of the upside in Mar/Apr so 25% downside participation isn't terrible. Remember this is when my thesis was completely off-base. Imagine my performance if I'm correct next time LOL.
I'm still holding 77% net cash with ~70% exposure to the Qs. Looking to sell 1 put (1 strike OTM)/trade if we keep dipping and 2-3 atm calls tomorrow at the open.
Wow Tariff Man going crazy! With all this news coming out, it's a bit of surprise that we are only down about 6-7%. It has been a very orderly decline which leads me to think that either we are about to rocket higher as soon as any inkling of good news come out or we need a big "shit the bed" 4% down day before the bottom. So in other words, either we go up or keep going down LOL.
My chipper demeanor is due to my portfolio only being down about 2.5%. My big concern is balancing the position sizing of selling calls against my ~3000 shares. I came to the conclusion that a good balance would be to sell 2-5 calls per day, depending on how many days to expiration. I'll sell more the closer we get to exp as annualized returns get better. I remain bullish so my calls will most likely be 1 strike OTM. If we keep dipping, I will continue to sell 1 put (1% of my portfolio) per trade. My goal is to slowly creep up my exposure if we continue to dip, provided that I remain overall bullish. My current exposure level is 70% of the Qs.
My chipper demeanor is due to my portfolio only being down about 2.5%. My big concern is balancing the position sizing of selling calls against my ~3000 shares. I came to the conclusion that a good balance would be to sell 2-5 calls per day, depending on how many days to expiration. I'll sell more the closer we get to exp as annualized returns get better. I remain bullish so my calls will most likely be 1 strike OTM. If we keep dipping, I will continue to sell 1 put (1% of my portfolio) per trade. My goal is to slowly creep up my exposure if we continue to dip, provided that I remain overall bullish. My current exposure level is 70% of the Qs.
Sold 5 calls throughout the day and sold 1 put at the open. On TQQQ, looking for the rally stall out around 50.75-51. Best to have some kind of bottoming pattern where we can put in a higher low. I'm still bullish, but won't be surprised if a range develops for at least several weeks.
A lot of people are pointing out that this is some kind of triple top pattern on the indices. I think all chart patterns can be reduced down to consolidation/trending/reversal patterns. Trends start and continue with higher high/higher lows and they reverse when you encounter the opposite. So a head and shoulder is just a lower high that gets confirmed with a lower low. A double/triple top is just innocuous consolidation until we print a lower low, thus starting a downtrend. Let's not make this any more complicated than it absolutely has to be.
So currently, all we see zoomed out is a rangebound market dating back to last year. I took advantage of the first roundtrip, got clapped by the second, and doing much better on the third. My thesis remains that we will break previous highs before encountering a 20% correction (bear market).
A lot of people are pointing out that this is some kind of triple top pattern on the indices. I think all chart patterns can be reduced down to consolidation/trending/reversal patterns. Trends start and continue with higher high/higher lows and they reverse when you encounter the opposite. So a head and shoulder is just a lower high that gets confirmed with a lower low. A double/triple top is just innocuous consolidation until we print a lower low, thus starting a downtrend. Let's not make this any more complicated than it absolutely has to be.
So currently, all we see zoomed out is a rangebound market dating back to last year. I took advantage of the first roundtrip, got clapped by the second, and doing much better on the third. My thesis remains that we will break previous highs before encountering a 20% correction (bear market).
Sold a bunch more slight OTM calls throughout the day. Made a brainfart error today when my plan was to clearly sell 3 puts/3 calls at the open but instead sold 3 puts/1 call. By the time I realized it, we've already taken a slight dump. I've always had an issue making silly mistakes, even in grade school math I was fucking up 3+7. I guess those algo automation guys don't have this problem.
Plan for tomorrow: start selling more slight OTM calls in size, goal is to shed these 3000+ shares while simultaneously maintain enough delta by selling ATM puts, probably in a 2:1 ratio. I think professionals call them strangles...
Common sense tells me to just do it in one shot, but I rather do it slowly as this rally still got legs. Overall thesis remains that we are in a rangebound market that ultimately resolves upwards. Overall exposure still ~70% to the Qs.
Plan for tomorrow: start selling more slight OTM calls in size, goal is to shed these 3000+ shares while simultaneously maintain enough delta by selling ATM puts, probably in a 2:1 ratio. I think professionals call them strangles...
Common sense tells me to just do it in one shot, but I rather do it slowly as this rally still got legs. Overall thesis remains that we are in a rangebound market that ultimately resolves upwards. Overall exposure still ~70% to the Qs.
I think your system is great for biotechs. It is working for LABU (3x long biotech ETF) and for AMRN (heart event reducing medicine). Biotech ssuffer from periodic sell offs but I think are great long term longs because of the science. AMRN got its accelerated review, but it just intensified the short attacks. Since I am selling calls weekly and selling puts, I don't care. Your system is especially good for collecting weekly options premium when shorts post dreaded Seeking Alpha hit pieces. The SA articles come with short attacks so collecting options premium is very good. It is common for biotechs to be infested with shorts (sort of like a bed bug infestation). Your rolling options strategy generates income while it wears off. Maybe you go into the pest control business.
Still think we are in a rangebound market. I was a little trigger happy with the calls so my net exposure is less than I would like now. Slowly selling 4-6 puts/day to get it back up there. Ultimately, I am positioned for us to resolve upwards. I don't expect any huge moves up this summer though.
It's not a bad idea if you're long-biased in this space--there's definitely enough vol there to make premium selling attractive.
It's not a bad idea if you're long-biased in this space--there's definitely enough vol there to make premium selling attractive.
@tnatrader How's the trading going? Hope its going well, i like you're thread/journal 
I've been busy, in the process of closing on a new home, but here's a quick update: selling 4-5 puts/day on top of selling puts/calls during dips/rallies respectively. I've done OK but in hindsight, there were some things to tweak for the future. Regardless, it's a constant learning experience and I can't be too mad making a profit.
For the immediate future, I continue to expect a rangebound environment, which will eventually resolve upwards. Looking to sell 4-5 puts as soon as the market opens.
For the immediate future, I continue to expect a rangebound environment, which will eventually resolve upwards. Looking to sell 4-5 puts as soon as the market opens.
@tnatrader Oh, busy times then! Nice that you're doing well!
Do you think some variation of your strategy could be made with only options and not getting "involved" with the underlying?
Do you think some variation of your strategy could be made with only options and not getting "involved" with the underlying?