I didn't do so well with my options trading in April, and I think a few things contributed to that. Still, since I was looking at a potential $100k loss at one point during the month, I didn't feel too bad about only losing 5 figures in premiums. Not to mention, the net growth of my shares value of almost a quarter million dollars.
The biggest factor, of course, were the trades that didn't land, namely the calls I closed early to avoid assignment. I've explained in the past my thinking for why I would buy to close instead of letting the shares be called away, but long story short it's due to long term capital gains on the shares in question.
Another factor that led to some of my losses was impatience: since I wasn't getting the premiums I'd received in previous months, I sold more contracts to try and match previous income levels, exposing myself to much more risk.
I wasn't trying to time the market (and echo the advice to not attempt that), and frankly got a bit unlucky with the timing of my sold calls and the stock's late month bounce. I *was*, however, lucky to avoid a much bigger loss on shares that expired on 5/1, which I'll talk about next month. Again, long story short, I was expecting smaller fluctuations in the price over the periods I'd sold calls for.
Outside of clowns like Burry, I'm one of the few who was probably glad to see the price drop at the end of last week. I'm still long on NVDA and expect higher prices on the horizon in the short and long term.
I don't know if "Nvidia always drops after earnings" is the sort of immutable fact that deserves to be enshrined in law, but I'm expecting volatility around earnings to make for some healthy premiums, and I'm hoping we see a new higher baseline (it's late and I don't remember the proper term) by the end of the month.
I ended the month without any more margined shares in my portfolio, though I still had another $2,500 of interest for the shares carried through April. Since I'd been carrying those shares, I wasn't able to sell as many puts for much of the month, but expect that will continue to generate the majority of my premiums in May.
Cheat sheet answers for the basic questions I usually get asked:
- 8,000 shares of NVDA with a cost basis of about $.08 per share.
- Shares were bought in 2002 when I was in high school for around $1,100.
- I'm using Schwab as my platform.
- NVDA makes up 90% of my portfolio.
- Operating capital in the $1.5 million range.
- This tool is OptionWheelTracker.
- I target for .1 to .2 deltas for calls, and occasionally will sell ATM puts because I'm less worried about assignment and/or bag holding extra shares.
- My DTE is typically 1-21 days.
- I made 42 trades in April, and 124 in March. My success rate in April was 76%, and 93% in March.
- In April, I had a 100% win rate for puts, and a 60% win rate for calls.
- My average holding period for winners was 5 days, and for losers 15 days.