As I am writing this, the stock market has been a roller coaster ride this week. Largely due to China’s Evergrande news. In fact, China has been applying reforms in so many sectors that some of my holdings took a large hit. Especially Chinese-related gaming, internet, and education-related stocks.
Market Sectors of My Positions
In the last few months, I was getting overconfident and opened a few positions with higher prices underlying. Those were the ones that really dragged down my PNL. I have recalibrated to look for low-priced stocks only again and as a result, my holdings are heavily skewed to the Health Care sector at this point.
August 2021 PNL
The August monthly PNL was -399 so approximately -8% return using the initial account value of $4,859 at the beginning of the month for the calculation.
NOTE: How I Record PNL for the Wheel Strategy
If I have got assigned for underlying stocks I would sell Covered call on them. I do not record PNL for such positions until I am able to close them.
In other words, I do not record the PNL unless the “Wheel” is completed.
Below is a brief summary of how the PNL is recorded.
Sell Put: If it expires out of the money (not assigned with a stock) or closed out early, it is recorded in the PNL. If a stock is assigned, it is not recorded.
Sell Covered Call: PNL is recorded when the Call is expired out of the money or closed out. It is also recorded when assigned and the stock is called away, or the entire Covered Call is closed out.
Win Rate for Different Spread Types
“Single” represents selling a Put or a Call contract.
Since it requires both selling Put and Call to complete the Wheel Strategy, any positions (Selling a Put or a Covered Call) that were closed with positive PNL was recorded as a “Win”.
|Spread Type||Win||Loss||% Win|
Thoughts for the August Report
Looking at the win/loss ratio, the negative PNL was really caused by a few positions, which happened to be Chinese stocks. I also sold a $7.5 strike Put for these positions, which I did rarely up until this point. I typically trade strikes $5 and lower. Looking at the timestamps, I opened these positions in mid-June to late July, which happened to be when I injured my low back and also felt overconfident with my trades. I simply just lost touch with how the market was moving.
While the total PNL Year To Date (YTD) is still positive at around $750 (18% return YTD), we only have about three months left this year at this point. In order for me to hit a 40% return this year, I would need to earn another $950 or so.