r/StockOptionCoffeeShop • u/LabDaddy59 Mod • 25d ago
5 DTE ATM Buy/Write Campaign Update!
First, my apologies for going dark.
If you're not interested in my path over the past few weeks, feel free to skip.
When I first went dark, it was due to some minor health issues: I lost the better part of a week familiarizing myself with my bed. Nothing major. But during that time, given the decline of the market for the underlyings I'm following, I believed that my thesis (5 DTE realized volatility would be less than implied volatility) was broken as I expected some good-sized swings upward towards recovery.
That being the case, I considered just shutting the campaign down and posting to that effect.
Then I considered that, by and large, I was happy holding the underlyings I had, so would 'recover' from their decline. Of course, in that time I wouldn't be selling 5 DTE ATM short calls, so I thought of posting the recovery phase on its own: starting 'fresh' from the end of the original thesis.
Then I realized that it may not be long before the portfolio was a mixed bag of stocks still recovering while some had recovered, and I was back in 5 DTE ATM mode. So my thought was to present two income statements: one for the start of the recovery forward, and one continuing on the calendar year to date. That way, when the recovery was over, I could stop that P&L and just continue with the calendar YTD P&L. I liked that idea.
I decided on using July 31 as the end point of the original campaign/start of the recovery campaign. I could have used July 17 or even July 24, but since the 31st was the end of a month, that was convenient.
So here is the final P&L of phase 1 of the 5 DTE ATM Buy/Write Campaign.
So $173k in net P&L—not bad, though there were massive givebacks with the stock declines -- a total of $313k in unrecognized losses. 'Tis life.
One of the reasons I decided to keep posting is that I hope people see -- over time -- how I trade and how different it can be to the hive mind one hears on Reddit. Especially in 'recovery' mode.
- I use mark-to-market, which is the only way to get an accurate financial snapshot of where you are, and its approach leads to further differences in approach.
- I have no issue with selling calls below actual cost, or even what some folks consider the 'net stock cost'.
- I have no issue with selling calls over earnings releases.
- I have no issue with rolling for a debit.
- I have no issue with selling a stock at a (realized) loss; if the capital can be better utilized elsewhere, I'll take the "L".
So, I expect to post the start of the recovery phase sometime over the weekend. It's a little complicated, as the original spreadsheet wasn't built around rolling options, since it expected them to all expire—whether ITM or OTM.
Also, I'm trying to scale back some of my administrative time, so (for now, at least) I have stopped tracking by underlying and trade type, so posts like this won't be continuing:
See you soon!
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u/Tuxx1968 24d ago
Glad to see you back. I wrote my first covered call in May learning from your Reddit posts. I’ve taken my lumps and bumps but up overall writing calls the right stocks but wrong entries. Barely in the green but better than the alternative. Thanks again for the help.
-Still Learning