The Results of 6 months of Options Trading (Covered Calls/Puts)

A place to talk about speculative investing ideas for the optional Variable Portfolio

Moderator: Global Moderator

Post Reply
User avatar
Greg
Executive Member
Executive Member
Posts: 1126
Joined: Sun May 20, 2012 6:12 pm
Location: Maryland

The Results of 6 months of Options Trading (Covered Calls/Puts)

Post by Greg » Sat Feb 25, 2023 9:19 am

Greetings Gyroscopic Community. I started getting into Options Trading (covered calls/puts) 6 months ago due to my thoughts that the stock market may be going into a recession or just low returns for the foreseeable future and trying to goose my returns. Below you'll see my actual returns per week (I have a spreadsheet I made to keep track of all of my profits/losses from each Option).

I do weekly options (expiring in 7 days), choose deltas between .15-.2, and make judgement calls of rolling my calls/puts into same expiration options if there are large market movements which is a judgment call.

I use do covered calls (ETFs I own) of IWM (small-cap blend), SPY (S&P 500), GLD (gold).

I do puts with SQQQ (3x inverse NASDAQ) with the cash portion of my portfolio.

I use these ETFs due to high liquidity which leads to better smaller bid/ask spreads and the ability to do weekly options since not all ETFs provide weeklys.

I've made after 26 weeks about $125 after taxes per week. This is based off of a portfolio of about $250k in underlying ETFs, for a yearly return of about 2.8% over and above what I was getting already from my assets. You can also see that my profits/losses can swing a lot, up sometimes $1000 that week, down sometimes by $3000.

Overall, I do like doing Options now and feel like it can provide a bit of extra income, although it does make you more anxious about having to watch the market now. You also spend more of your time looking at investments, so less of a "set it and forget it" like with our traditional means of investing of PP/Golden-Butterfly, etc.

Week Average (after tax) profit/loss per week
#
1 $166.56
2 $435.11
3 $123.14
4 $251.80
5 $371.56
6 $448.17
7 $234.73
8 $315.69
9 $373.61
10 $403.19
11 $194.04
12 $59.75
13 $80.06
14 $79.92
15 $75.49
16 $101.91
17 $196.40
18 $183.96
19 $203.16
20 $186.47
21 $169.00
22 $181.21
23 $37.46
24 $51.21
25 $76.12
26 $92.17
27 $125.99
User avatar
vnatale
Executive Member
Executive Member
Posts: 9423
Joined: Fri Apr 12, 2019 8:56 pm
Location: Massachusetts
Contact:

Re: The Results of 6 months of Options Trading (Covered Calls/Puts)

Post by vnatale » Sun Feb 26, 2023 9:22 am

Congratulations on your success!

As a side note ..... I'd set your spreadsheet number format to no decimal places as the pennies are irrelevant and are just noise when you are looking at the numbers and trying to absorb the result of each week.

Just for instance ... I'm looking at your last number and mentally having to do work to adjust your number to a rounded $126 to get a better sense of its magnitude.
Above provided by: Vinny, who always says: "I only regret that I have but one lap to give to my cats." AND "I'm a more-is-more person."
User avatar
Greg
Executive Member
Executive Member
Posts: 1126
Joined: Sun May 20, 2012 6:12 pm
Location: Maryland

Re: The Results of 6 months of Options Trading (Covered Calls/Puts)

Post by Greg » Mon Feb 27, 2023 8:46 am

vnatale wrote:
Sun Feb 26, 2023 9:22 am
Congratulations on your success!

As a side note ..... I'd set your spreadsheet number format to no decimal places as the pennies are irrelevant and are just noise when you are looking at the numbers and trying to absorb the result of each week.

Just for instance ... I'm looking at your last number and mentally having to do work to adjust your number to a rounded $126 to get a better sense of its magnitude.
Thanks Vinny! Agreed it's in the noise, probably could change that on my overall spreadsheet and raise my visibility aspects (I also graph it so it is easier to see and have one of those conditional color bars as well).

I have been trying to read up though on if "Options" are just a zero-sum game and what probability of people actually make money with it over some finite time period.
User avatar
Xan
Administrator
Administrator
Posts: 4392
Joined: Tue Mar 13, 2012 1:51 pm

Re: The Results of 6 months of Options Trading (Covered Calls/Puts)

Post by Xan » Mon Feb 27, 2023 9:02 am

Greg wrote:
Mon Feb 27, 2023 8:46 am
vnatale wrote:
Sun Feb 26, 2023 9:22 am
Congratulations on your success!

As a side note ..... I'd set your spreadsheet number format to no decimal places as the pennies are irrelevant and are just noise when you are looking at the numbers and trying to absorb the result of each week.

Just for instance ... I'm looking at your last number and mentally having to do work to adjust your number to a rounded $126 to get a better sense of its magnitude.
Thanks Vinny! Agreed it's in the noise, probably could change that on my overall spreadsheet and raise my visibility aspects (I also graph it so it is easier to see and have one of those conditional color bars as well).

I have been trying to read up though on if "Options" are just a zero-sum game and what probability of people actually make money with it over some finite time period.

Greg, great to see you back!

I'm struggling to see how options trading can be other than zero-sum, but maybe I'm wrong. It also seems like it might be the kind of thing where you make a little money each week for a while but then something goes wrong and you give up all your gains in one bad week.
User avatar
Greg
Executive Member
Executive Member
Posts: 1126
Joined: Sun May 20, 2012 6:12 pm
Location: Maryland

Re: The Results of 6 months of Options Trading (Covered Calls/Puts)

Post by Greg » Mon Feb 27, 2023 11:21 am

Xan wrote:
Mon Feb 27, 2023 9:02 am
Greg wrote:
Mon Feb 27, 2023 8:46 am
vnatale wrote:
Sun Feb 26, 2023 9:22 am
Congratulations on your success!

As a side note ..... I'd set your spreadsheet number format to no decimal places as the pennies are irrelevant and are just noise when you are looking at the numbers and trying to absorb the result of each week.

Just for instance ... I'm looking at your last number and mentally having to do work to adjust your number to a rounded $126 to get a better sense of its magnitude.
Thanks Vinny! Agreed it's in the noise, probably could change that on my overall spreadsheet and raise my visibility aspects (I also graph it so it is easier to see and have one of those conditional color bars as well).

I have been trying to read up though on if "Options" are just a zero-sum game and what probability of people actually make money with it over some finite time period.

Greg, great to see you back!

I'm struggling to see how options trading can be other than zero-sum, but maybe I'm wrong. It also seems like it might be the kind of thing where you make a little money each week for a while but then something goes wrong and you give up all your gains in one bad week.
Nice to see you again Xan. I lurk on this forum from time to time but have gotten into Twitter much more over the previous years. Just such a fast way to absorb information about so many topics. That being said, I've always appreciated the thoughtful, intelligent, and civil conversations that occur on this forum. You don't always get that with Twitter.

That being said, I am in agreement with you, although I try to limit my down-side a bit with some "protection" in my eyes. I don't tend to hold options during big market events. That right now includes FOMC meetings with the Fed Chairman, or during CPI-U monthly results, etc. The days for those swings can sometimes be large and you're taking a gamble to be on the right side of that one from an Options-perspective.

Stock-trading I suppose could be considered zero-sum in the short-term while in the long-term it is more based on earnings, etc. vs investor sentiment. I wonder if Options is the same way at all (e.g. if you do options for less than 12 months, then you're no better than gambling via zero-sum, but over 12 months then there is an 80% chance you'll be in the positive because of players dropping out of the game, etc., and it goes up from there).
User avatar
I Shrugged
Executive Member
Executive Member
Posts: 2062
Joined: Tue Dec 18, 2012 6:35 pm

Re: The Results of 6 months of Options Trading (Covered Calls/Puts)

Post by I Shrugged » Mon Feb 27, 2023 7:55 pm

Doug Casey, a lifelong successful speculator, likes to trade options. He likes the small easy gains. I can’t remember which way he trades except he says he plays the role of the casino and the other parties are more the gamblers.

He also says most people can’t/shouldn’t try what he does. I found a clip.

Start at 11:45. The rest of it is dangerous anarcho-capitalist thinking.

https://youtu.be/81dEo4ZGTNo
User avatar
Xan
Administrator
Administrator
Posts: 4392
Joined: Tue Mar 13, 2012 1:51 pm

Re: The Results of 6 months of Options Trading (Covered Calls/Puts)

Post by Xan » Mon Feb 27, 2023 8:48 pm

I Shrugged wrote:
Mon Feb 27, 2023 7:55 pm
Doug Casey, a lifelong successful speculator, likes to trade options. He likes the small easy gains. I can’t remember which way he trades except he says he plays the role of the casino and the other parties are more the gamblers.

He also says most people can’t/shouldn’t try what he does. I found a clip.

Start at 11:45. The rest of it is dangerous anarcho-capitalist thinking.

https://youtu.be/81dEo4ZGTNo

Ah, interesting. That does cast the whole thing in a different light. Now that makes me wonder if selling options is taking advantage of others' naivety.
User avatar
I Shrugged
Executive Member
Executive Member
Posts: 2062
Joined: Tue Dec 18, 2012 6:35 pm

Re: The Results of 6 months of Options Trading (Covered Calls/Puts)

Post by I Shrugged » Tue Feb 28, 2023 7:32 am

Xan wrote:
Mon Feb 27, 2023 8:48 pm
I Shrugged wrote:
Mon Feb 27, 2023 7:55 pm
Doug Casey, a lifelong successful speculator, likes to trade options. He likes the small easy gains. I can’t remember which way he trades except he says he plays the role of the casino and the other parties are more the gamblers.

He also says most people can’t/shouldn’t try what he does. I found a clip.

Start at 11:45. The rest of it is dangerous anarcho-capitalist thinking.

https://youtu.be/81dEo4ZGTNo

Ah, interesting. That does cast the whole thing in a different light. Now that makes me wonder if selling options is taking advantage of others' naivety.

Supposedly they know what they are getting into. I would look at it as meeting a market need. Not to mention, you might lose.
User avatar
Greg
Executive Member
Executive Member
Posts: 1126
Joined: Sun May 20, 2012 6:12 pm
Location: Maryland

Re: The Results of 6 months of Options Trading (Covered Calls/Puts)

Post by Greg » Tue Feb 28, 2023 9:07 am

I Shrugged wrote:
Mon Feb 27, 2023 7:55 pm
Doug Casey, a lifelong successful speculator, likes to trade options. He likes the small easy gains. I can’t remember which way he trades except he says he plays the role of the casino and the other parties are more the gamblers.

He also says most people can’t/shouldn’t try what he does. I found a clip.

Start at 11:45. The rest of it is dangerous anarcho-capitalist thinking.

https://youtu.be/81dEo4ZGTNo
That's along my lines of thinking as well. Thanks for sending this video. Couple things about it:

1.) if you are selling options, you act as the Casino. I like thinking of it as "selling insurance" to others as if you were an insurance company, and you are only selling to those when you ideally think there will be a profit involved.
2.) It's a rich-man's game. For the most part, small-money investors aren't going to have the capital to get 100 shares of whatever underlying asset they want to be able to sell an option for it. The market makers are trying to then push you to "buy" options as a "get-rich-quick" scheme, you're effectively trying to play the lottery in the hopes that every time you put money into buying an option, you have the chance to make it big.
User avatar
Cortopassi
Executive Member
Executive Member
Posts: 3338
Joined: Mon Feb 24, 2014 2:28 pm
Location: https://www.jwst.nasa.gov/content/webbL ... sWebb.html

Re: The Results of 6 months of Options Trading (Covered Calls/Puts)

Post by Cortopassi » Tue Feb 28, 2023 2:10 pm

I sold puts and calls early 2022 through about April.

I did fine, but in the end the time and anxiousness (esp. when trading weekly ones) was not worth it to me.

Instead, for some portion of my net worth, I own DIVO and JEPI, both are dividend focused funds that write calls on some of their holdings to juice the return. It's absolutely worth it to me to pay the expense fee of letting someone else deal with the tracking and trading.

And there's no doubt with covered calls at least, you will eventually get stuck, either frozen out and scared to write because of your underlying getting called at a lower price than your basis, or you will keep on rolling out further and further to try and stay somewhat even with the rise.

Anyway, more power to you if it works long term. I decided while it generally worked, it wasn't worth the time or stress.
User avatar
Greg
Executive Member
Executive Member
Posts: 1126
Joined: Sun May 20, 2012 6:12 pm
Location: Maryland

Re: The Results of 6 months of Options Trading (Covered Calls/Puts)

Post by Greg » Fri Mar 03, 2023 11:59 am

Cortopassi wrote:
Tue Feb 28, 2023 2:10 pm
I sold puts and calls early 2022 through about April.

I did fine, but in the end the time and anxiousness (esp. when trading weekly ones) was not worth it to me.

Instead, for some portion of my net worth, I own DIVO and JEPI, both are dividend focused funds that write calls on some of their holdings to juice the return. It's absolutely worth it to me to pay the expense fee of letting someone else deal with the tracking and trading.

And there's no doubt with covered calls at least, you will eventually get stuck, either frozen out and scared to write because of your underlying getting called at a lower price than your basis, or you will keep on rolling out further and further to try and stay somewhat even with the rise.

Anyway, more power to you if it works long term. I decided while it generally worked, it wasn't worth the time or stress.
Interesting thought on using "call funds" like DIVO and JEPI, hadn't heard of their approach. Agreed it certainly takes time and stress for this. I told myself that I'd just keep doing this until I'd lose $1000 in total (as in the overall strategy of mine was a net loss). Then it'd tell me that even with the stress/time component, I'm still coming out on the losing end and would be better served to just do the mechanical rebalancing bands, etc.

We'll see, some days I'm elated to say "the market went down but I MADE money", some days I'm just staring at an ETF and willing it with my mind to "go UPPPPP/DOWNNNNN" (depending on if it is a "put" or a "call").
User avatar
Cortopassi
Executive Member
Executive Member
Posts: 3338
Joined: Mon Feb 24, 2014 2:28 pm
Location: https://www.jwst.nasa.gov/content/webbL ... sWebb.html

Re: The Results of 6 months of Options Trading (Covered Calls/Puts)

Post by Cortopassi » Fri Mar 03, 2023 12:28 pm

Greg wrote:
Fri Mar 03, 2023 11:59 am

We'll see, some days I'm elated to say "the market went down but I MADE money", some days I'm just staring at an ETF and willing it with my mind to "go UPPPPP/DOWNNNNN" (depending on if it is a "put" or a "call").
Yeah. I did the same. I don't anymore. I truly do not miss it at all.
Post Reply