monthly report

Options Trading Monthly Report January 2021

“Oops! I did it again”. No, I am not talking about Britney Spear’s song. I am talking about how I sold Call options again and lost money again. This time it was BAD because they were GME and BBBY Call options. I lost most of the profits I made last year.

Why do we self-sabotage? Upon doing a quick Google search, it seems there could be certain aspects of my life that I am not doing well (either consciously aware or unaware of) and that might have led me to self-sabotage. I am getting so sick and tired of this behavior so added the following three books to my reading list to learn more about what self-sabotage behavior is all about. More to come on that topic once I finish these books.

What puzzles me is that if the GME and BBBY short Call options were not included in the PNL, the Wheel strategy produced a 10% return (of the entire account) in January. There was no reason for me to take such stupendous action, yet I did it.

There are a few reasons I could think of why I short GME and BBBY.

  • Overconfidence: The Wheel Strategy has been going on so well that I got cocky.
  • Got bored: The Wheel Strategy has been going on so well that I felt like doing something different.
  • FOMO: Everyone is talking about GME and short squeeze. Why not join the game so I can talk about it too.
  • Ego: I want to prove that I am a good options trader, I can trade all kinds of strategies, even though I don’t need to do that.
  • Greed: The Implied Volatility (IV) of GME and BBBY options were so high that I wanted to make a quick buck.
pnl jan 2021

January 2021 PNL

 

NOTE: How I Record PNL for the Wheel Strategy

If I would get 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.

Sell Stock: PNL is recorded.

January 2021 PNL

Spread Type Month PNL
COVERED January  $                        169
DIAGONAL January  $                    2,192
SINGLE January  $                 (32,267)
STRADDLE January  $                           –
STRANGLE January  $                           –
VERTICAL January  $                          80

NOTE on Spread Type: When transactions are exported from Thinkorswim the spread type is already assigned by the platform. “Single” means a single leg option. Selling Put is considered “Single”. Selling Call is also considered “Single”. Since I only sell Call options when a stock is assigned, the system assigned the selling Call as “Single”.  If a position is opened as a Covered Call (buying stock and selling a Call option at the same time), the system would assign it as a “Covered”.

For January 2021, short Call GME and BBBY were also included in “Single”.

January 2021 Top Winners

EOLS continues to be the top winner since November 2020. GNW remains on the list since December 2020 thanks to speculation that the merger with Oceanwide would be completed (which it did not). KNDI is a new entry and is a part of the electric vehicle-related stocks that kept popping up on the screener since late 2020.

Symbol January PNL
EOLS  $          2,850
GNW  $          1,869
KNDI  $          1,258

EOLS

Positions closed were opened back in late November / early December when the stock was still hovering between the $3 and $4 range. The stock price took off so now is trading close to $7. IV is still pretty high so with the right market condition (such as elevated market volatility), there could be a good entry point again.

eols jan 2021

GNW

I already had some short Put positions in December but opened more at $4 strike and $3.5 strike short Put positions right before the stock price tanked at the end of December 2020. Some expired out of the money in January, which contributed to the January PNL. Also got assigned with some stocks since the stock price dropped below $4 at expiration so holding on to them until the price recovers back to $4 to get out.

gnw jan 2021

 

KNDI

Entered in early and late December. It’s an electric vehicle-related stock that showed up on my screener just like these other electric vehicle-related stocks back in December. The IV was pretty high so opened options with a strike price below the $6 support/resistance line and still managed to get a pretty decent premium.

According to finviz.com

Kandi Technologies Group, Inc., through its subsidiaries, designs, develops, manufactures, and commercializes electric vehicle (EV) products and parts and off-road vehicles in the People’s Republic of China and internationally

 


kndi jan 2021

January 2021 Top Losers

 

Symbol January PNL
GME  $      (37,985)
BBBY  $        (9,010)
K  $            (250)

GME

If you have been following the market lately, I believe no introduction is needed for this one. I somehow thought selling a Call option was a good idea when the stock price went up beyond $100 and dropped significantly the day prior on 1/25/2021 (red arrow). Opened a short Call position at a $200 strike when the stock was trading around $90 the next day (1/26/2021). The position was going to expire in 3 days so I was pretty confident it would not spike beyond $200.

Who could predict that the stock would climb to more than $150 the same day and went on to reach more than $300 the next day (1/27/2021). It also overlapped with the VIX spike because S&P 500 was dropping significantly on 1/27/2021 so IV for the options jumped even further and made it more expensive to buy back the open positions. Closed my positions on 1/27/2021.

gme january 2021

 

BBBY

Bed Bath & Beyond was also a stock that was heavily traded around the same time GME was going crazy. It had a spike then retraced back lower the day prior to my entry (1/25/2021). Same kind of thinking as GME. Opened multiple short Call positions at $60 strike with weekly options on 1/26/2021 (red arrow). Did not think about potential loss and was just thinking how unlikely it would be for the stock to go beyond $60. Combination of a large spike in stock price and an increase in IV, it got really expensive to buy back the options. Closed my positions on 1/27/2021 on the day the stock price jumped up to $53.9 at one point.

bbby jan 2021

K

This is one of those positions that I did everything right even though I lost money. The stock price breached the support/resistance line (around $62) a few days prior to me exiting my position. My position was at a $60 strike so I gave it a few days to see if it would recover but it just kept going down so got out when it got closer to $58. The stock price ended up recovering about 2 weeks later, then started declining again. Who could have predicted that?

k jan 2021

 

Cumulative PNL for 2021

Spread Type PNL Trade Count PNL / Trade
SINGLE  $       (32,261) 69  $         (467.55)
STRADDLE  $                 – 0 #DIV/0!
DIAGONAL  $          2,192 4  $          548.00
COVERED  $              169 1  $          169.00
VERTICAL  $                80 2  $             40.00
STRANGLE  $                 – 0 #DIV/0!

Win/Loss Ratio

Spread Type Win Loss % Win
SINGLE              63.00                   6.00 91%
STRADDLE                     –                        – #DIV/0!
DIAGONAL                 4.00                        – 100%
COVERED                 1.00                        – 100%
VERTICAL                 1.00                   1.00 50%
STRANGLE                     –                        – #DIV/0!

Thoughts for January Report

I was really upset the day I closed GME and BBBY positions but I was really surprised at how fast I recovered psychologically this time compared to so many times before when I made a bad mistake.

This experience made me realize that I am just not ready in so many aspects yet to be a successful options trader. I know success is relative. In my case, if I could produce a consistent profit from trading options, I consider it a success. Not hitting a million dollars. Not flying around with a private jet. I just want to be a consistently profitable options trader.

 

6 replies
  1. Sandy P
    Sandy P says:

    We learn everyday!. Thanks for sharing your experience with the Wheel Strategy. I enjoy reading your articles every month. I have been using the same strategy for couple of months and was able to generate about 10% every month so far. As you said, we need to make this return consistent for long term growth. Keep up the great work!

    Reply
  2. Jan
    Jan says:

    Hey Tony, you are not the only going through this rollercoaster. I respect you because of you openness on your trades. I’m sure it will also help you to think about it thoroughly. Keep it up!

    I didn’t do the deepdive on your website but did you report all the positions that you are taking? Or do you only report afterwards? I will look at them more closely.

    Reply

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