monthly report

September 2022 – Trade With 50K Challenge

In case you missed it last month, this is the second monthly report of the “Can you make a living with a 50K trading account?” challenge.

The idea is to see if it is possible to earn enough income by trading options with a 50K account.

There will be withdrawals from the account every month to supplement living expenses and the idea is to simulate this as close as possible to a real-life situation so we can see how stressful (or not stressful) being a full-time trader could be.

I must say September was really tough compared to last month. While the PNL was positive for the month, the account value did not look good at all.

September 2022 PNL

To simplify the reporting, this section will be subdivided into two sections by grouping trades that were related to the VIX options and not related to VIX options.

Non-VIX Options trades

PNL for September was nicely positive due to SPX and SPY hedging positions.  The negative PNL number was also due to SPX and SPY hedging positions during early September when the market went positive for several days. I know my own “Poor” directional trade ability so I decided to not initiate any hedging directional SPX and SPY trades moving forward and did not open new SPX and SPY hedging positions from mid-September.

This can be seen pretty clearly in the trading account value because it started declining significantly in late September as the market went down.

Month PNL Positive Negative
 September  $3,793.00  $5,765.00  $(1,972.00)

VIX Options trades

All the profit was from shorting VIX Call options. Some positions were closed when the market when higher and VIX went lower.

Obviously, I should have closed everything at that point because the market tanked subsequently, and the VIX spiked beyond 30.

Month PNL Positive Negative
September $2,047.00 $2,047.00  $2,047.00  $0

Trading Account Value

This graph shows how the trading account value fluctuated during the month.

Please note funds were withdrawn weekly ($500 or $1,500 bi-weekly = $4,000 monthly) to cover living expenses.

My personal “success” metric at this point would be to maintain the account around the 50K levels.

As I mentioned earlier, in mid-September I decided to not initiate any new hedging positions with SPX and SPY.

As a result, the account value declined substantially as the market kept going lower.

account value 10.5.2022

SPX Chart

The SPX chart provides more context as to what happened in the market for the month and makes it easier to see and compare how that is reflected in the trading account value.

It is easy to see the trading account value is highly correlated to SPX as it started to decline in the second half of September because I decided to not initiate any hedge positions.

spx sep 2022

Thoughts for September 2022

A couple of mistakes I made this month was

  1. SPY directional trades that caused close to $2000 in loss
  2. Only closed partially on the short VIX options positions and not all of them at the beginning of September

I do not consider my decision of stopped trading SPX and SPY directional positions to hedge the account as a mistake.

In hindsight, that probably would have stabilized the account and prevented its significant drawdown towards the end of September, but it would also need significantly more attention on my part.

By not doing those SPX and SPY directional trades, I was able to spend much less time in front of the screens and also felt calmer physiologically.

This of course doesn’t mean I did not initiate any kind of directional trades. I opened a position with BA and managed to close with a small profit. I also opened several opportunistic positions such as this one.

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