As I mentioned in the last month’s report, I had some open Straddle, Vertical positions that I was pretty sure would be losers. Those positions were closed in June and really dragged down the overall PNL. On the bright side, shorting Single Put strategy has been consistent for the most part. One mistake I made would be I allocated a large portion of the capital to one underlying stock and I got assigned and now holding the stock. This was part of the plan when it comes to shorting Puts except I did not expect the stock price to drop so dramatically. More details will be discussed below.
Profit and Loss (PNL) by Strategy
I am convinced that Selling one-leg Put (Naked Put) is going to be my backbone strategy. Over 60 trades with an 88% winning ratio. The only strategy that is giving a positive PNL. Even if my position gets assigned, I could just sell Covered Call until the stock price gets back up to the price I want to exit (the Wheel Strategy).
Most of the vertical positions were Bear Call spread, expecting the underlying stock price to go down. IWM, F, SIG RCL, DKS. None of them worked out.
It’s a mystery why I kept trading this strategy. I clearly am really bad at this option strategy.
Traded SPY and HQ. Lost both. Had some small successes in May but did not work out in June.
Challenges / Pitfall
I allocated way too much capital in GNW. The ROI was just too good to be true with a 20% ROI for 30 DTE. That’s about 240% annual ROI.
However, not only it did not expire out of the money, it went beyond the break-even point so now I am holding a large number of shares. The fundamentals are not bad and the valuation of the stock price is higher than my entry point so I am not worried too much at this point.
Obviously, I got into this trouble by allocating too much capital. Definitely, something to consider moving forward when opening a position.
Cumulative PNL for 2020 (March-June)
The more I look at the summary table, the more I regret trading Straddle and Vertical. “Why?” I kept asking myself.
One reason I could think of is the imposter syndrome. I feel like I cannot say I am a successful options trader if I cannot win and make money using all of the options strategies out there.
Why do I need to prove it? Who am I trying to prove that I am a successful options trader anyway? I need to stop caring what people think including those who are close to me. Many of them don’t believe in what I am doing and just waiting to see me blow up my account so they can tell me “I told you so”. I wonder how they will react when I figure out how to make my trades consistent. Based on the results I am seeing, it’s not “IF” anymore. It’s just a matter of “When”.
|Spread Type||PNL||Trade Count||PNL / Trade|
|SINGLE||$ 4,543||67||$ 67.81|
|STRADDLE||$ (1,597)||7||$ (228.14)|
|DIAGONAL||$ (402)||8||$ (50.25)|
|COVERED||$ (15)||1||$ (15.00)|
|VERTICAL||$ (1,099)||11||$ (99.91)|
|STRANGLE||$ (238)||10||$ (23.80)|
Plan for July 2020
June was a “cleaning” month so to speak. Now that I have closed all other types of spreads, I can now really focus on Selling one-leg Put. I have started looking into refining my screening process to find trade opportunities. Let’s see what will happen.
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