My Options Trading Unlocked – Newsletter 12 Apr 2024

Newsletter – Insights for Tomorrow’s Profits

12 April 2024

Time to raise profitability …

Read on and learn more about my current positions

Hi,

In this newsletter I will report about my March results, highlighting key successes and areas for improvement. Next I will share as usual very transparently my current positions, providing rationale for each and how they align with overall investment goals. Finally I will be sharing expectations for the coming weeks, including what I think are potential market drivers and areas of opportunity.
My goal is to share my options trading journey and to help you learn and profit from options trading.

As you will know by now, I have decided to transition my update newsletter from a weekly to a monthly format. This edition is a bit later than intended, but better late than never.

Remember, for those eager to follow my real-time trades as I make them or all the results of my closing trades, our Discord channel remains active for immediate trade updates of my portfolio and options discussions. I am excited about this new approach and confident that this change will enhance our journey in options trading together.

I’m also excited to share that our options trading spreadsheets have been updated with enhancements to support our and your trading activities better. These improvements are designed to simplify the process of tracking and analyzing your trades, making it more efficient and user-friendly. The updates include an easier way to enter and account for assignment.

Our goal is to provide you with a streamlined tool that supports your decision-making process, enhancing your trading performance through meticulous record-keeping and analysis. I really appreciate your user feedback!

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1. Introduction

Three months into 2024, my journey through the fantastic world of options trading has been both enlightening and challenging. Navigating the volatile world of options trading requires strategic choices, risk management, and trader resilience.

Realizing I haven’t hit my trading goals for a while now, it’s clear it’s time to make some changes and try to earn more money. This means I need to start using simpler, clear rules that don’t let emotions get in the way when I decide to buy or sell. It’s also smart to take some profit off the table once I reach a certain gain, and more importantly take an early loss.

Given the setbacks I’ve faced, particularly from specific positions, it’s crucial to revisit and refine my approach for new positions.

Every experience of an outlier or a large loss is a sobering reminder of the volatile nature of options trading and the importance of continuous learning and adaptation.

And that is exactly what I am doing.

Happy trading to you all!

2. Overall Market Overview (Week from 08 Mar 24 – 12 Apr 24)

When I prepare for trading or following the market and my positions, I focus on two aspects : the general trend of the market with the indexes, mainly the SPX and the volatility of the stocks with the VIX. The reason why is clear: the general trend of the market and stock volatility are essential for options traders because they directly impact options pricing, influence trading strategies, and offer opportunities for risk management and profit generation in the dynamic world of options trading.

And then again, I don’t want to over-analyse too: but basically the SPX trend and VIX levels are not far away.

The market decided to keep going higher during March 2024 and it continued its move up above 5200. After a week in April, the market gave the impression to come to a halt and maybe to a reversal which it confirmed on a red Friday 12 April 2024 towards 5110.

The SPX remained strong throughout February and March but we will have to see what next weeks will bring.

SPX Chart – SPX 5111 $

Market outlook for next week : I must agree with the saying nobody knows anything. Although the graph doesn’t show any signs of weakness, I prefer to be not too much directional.

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VIX Chart – VIX USD $ 14.74

While the VIX dropped back to below 13 in the last weeks of March, today the VIX spiked back up to 18,68

Last time VIX was above 20 was in October 2023. It’s hard to imagine the VIX staying below 20 all 2024 … but again who really knows. I will be a very careful posture when adding new positions for now applying strict risk management rules.

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2. TOCF Portfolio Monthly Recap & Trading Plan – March 2024

a. Results March 2024 (01 Mar – 31 Mar 24) & currently open positions:

Here is an overview for all accounts of the positions and results of last month :

Results – Monthly performance

I’ll grade the performance of my trade plans as follows:

• ✅ I could closed the position according to the trading plan
• 🔶 Position did not go according to the trading plan, but after management I am satisfied with the results (positive or negative).
• ❌ Position that was mainly mismanaged – I need to learn and avoid these positions.

7 positions were closed last month. Details about all the trades are posted in the discord channels:

• ✅ 06 Mar 24 – Closing 2 $SOFI CC after a 22 day resulting in a net P/L of $58,00
• ✅ 06 Mar 24 – Closing 1 $TSLA Put intraday resulting in a net P/L of $56,00 with a ROC of 1,4% and an Ann ROC 504%
• 🔶 09 Mar 24 – Closing 1 $GDX Put for a 71 day 1% return, resulting in a scratch net P/L of $1,00
• ✅ 09 Mar 24 – Closing 1 $AAPL Put for a 2 day 478% return, resulting in a net P/L of $77,00 with a ROC of 2,66% and an Ann ROC 478%
• ✅ 12 Mar 24 – Closing 1 $NKE Put for a 6 day 321% return, resulting in a net P/L of $60,00 with a ROC of 5,36% and an Ann ROC 321%
• ✅ 20 Mar 24 – Closing $TSLA for a 7 day 141% return : BTC 1 CSP for $1,2 resulting in a net P/L of $116,00 with a ROC of 2,74% and an Ann ROC 141%.

Option Income – March 2024:

• 📈 Set Goal $1350 of option income : 🟩 🟩 🟩 🟨 ⬜️ ⬜️ ⬜️ ⬜️ ⬜️ ⬜️ – finished below the monthly target $ 478 / $1350 (= 35%) 🔴
• 🟢 Realised Net Profit/Loss : $ 478
• The profits (or losses) are always the sum of the results of the closed option positions during that given period (profit/loss of assignment not included)

Portfolio Net Liq Values – 12 Apr 2024:

• 🟢 Mexem : € 48230 (monthly change : € +300 or + 0,63 %)
• 🔴 TastyTrade TT : € 6137 (monthly change : € -272 or -4,2 %)
• 🟢 TastyTrade WH : € 3211 (monthly change : € +8 or + 0,1 %)

Total value for the 3 accounts :

• 🟢 in euros : € 57579(monthly change : € +37 or -0,97 %)

The open unrealised P/L is ($12474), a strong negative mainly due to the FSR performance, responsible for ($9800) unrealised loss.

Info – Interpretation of the exchange rate : I am from Europe and my base currency is euro. I am trading the US markets from a MEXEM account held in euros and from a Tastytrade account held in dollars. This means that I have and express my open positions and profits/losses of the US markets in dollars on both accounts. The Net Liq for me is only relevant in euros, taking into account the exchange rate (which sometimes is an advantage and sometimes not). This explains the difference in results between euros and dollars and for me the evolution of the Net Liq in euros is what matters ultimately.

Comments

The FSR position turned out to be a fiasco, a total loss. An important lesson is learned here. A stock can go to 0. I am think to set a hard stop-loss from now on, because hope is usually the worst strategy.

c. My Trading Plan for upcoming week:

At portfolio level :

• The MX account is in euro en the TT accounts in USD (hence the difference of previous amounts).
• Theta level is still too low, so this is an action point for the coming weeks. I will look for opportunities to bring back up the portfolio theta, keeping in mind the low VIX
• I have been aiming to keep a descent delta/theta ratio. I have corrected the spreadsheet in a way that holding long stock is now also part of the calculation making the Spy B weighted delta correct for the whole of the positions. The sum of the SPY Beta Weighted Deltas of my three accounts is $102 (meaning if the SPY goes up $1, my portfolio value will up $102 and vice versa).
• I am aiming for a 1:2 ratio (or lower) with neutral delta/theta. My positions have made a nice recovery and after adjusting some positions where required, the delta/theta ratio is at 0,65 at the moment. I can certainly live with the small short ratio, but the theta is too low. But again, I need to keep the low VIX in mind.

Most of my open positions are in the red. I will have to continue battling to get the assigned stock back up to profitability by looking for opportunities for covered calls.

General Trading improvements for the coming months:

In case you missed it my strategy document or you hadn’t had the time yet, here is the link again to “Developing my strategy and profit goals guide”.

I have learned that navigating the unpredictable waters of the stock market demands a solid risk management strategy, even though losses remain an inherent part of trading. Understanding that minimizing losses and their impact is the cornerstone to longevity in trading is crucial. I have experienced the impact of a few big losses on the overall result of the portfolio. I will review my strategy document in May and see if I need and where I will have to fine tune.

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3. Weekly Watchlist

I will obviously keep my attention to the open positions I have : $FSR, $QCOM, $AMD, $SOFI, $PYPL, $PLTR, $NKE, $MRVL, $T, $SOXL and $NIO.

Keeping a keen eye on interesting movements of the followong quality stocks :

$AAPL, $MSFT, $AI, $TSLA, $GOOGL, $AMZN,

4. Other stuff – info & links

• Both my spreadsheets (wheel strategy spreadsheet & the All In Journal) have received an update last week :
  • improved way to enter assigment of shares after ITM options
  • improved calculations of cost basis of shares
  • added dividend field and calculations in P/L
  • other minor improvement

• I have been receiving a couple of questions of users of the spreadsheet how to get the updated versions. Just to be clear, the normal updates of a spreadsheet are always free and the best way to get them is by making an account when buying and subscribing to the newsletter to get info about possible updates. This will allow you to always download the updates. Take a look at this article which explains how : https://www.tradingoptionscashflow.com/benefits-of-creating-a-tocf-shop-account/ . If you bought the earlier version on Etsy, drop me an email and I’ll give you a free download of the updated version at no extra cost.

• I have noticed that users often ask the same questions about the spreadsheets I provide via the webshop. Hence the reason why I have started a page with Frequently Asked Questions (FAQ) – And if you have any specific questions, please do take a look at the FAQ Page about the use of our spreadsheets.

• As a reminder, you can always follow my opening and closing trades via the discord channel. I’ve made the decision to refrain from duplicating content from the Discord channels here in my newsletter. This in order to optimize my time and focus and provide the most value to you, primarily on improving my trade management skills and sharing my experiences with you all. When there is a particular trade I feel warrants a comprehensive analysis, I will definitely include all pertinent details and figures in the newsletter.

• A permanent project is to improve the page My Approach to a methodic Options Trading Strategy and Profit Goals. I am really hoping to exchange some thoughts with you all on this topic, so leave me your thoughts in the comments of that page!

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I hope that providing some insights in my trading and my thoughts, will trigger some thoughts and maybe ideas that will help you with your trading and helps to become an even more profitable options trader. Don’t hesitate to contact me to talk options.

Thanks for reading the TOCF Newsletter, great and happy trading!

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Let’s generate cash flow together !

P&K

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Please do leave your thoughts below in the comments.