Hey everyone! I’m 24. I’ve been learning options for the last four months. I wouldn’t say I’m lost, but I need some new strategies. I started with LEAPs. They seemed “safe” to me. But, the delta on them was so low and I bought so far out of the money they did nothing. I took a loss on these. So, I switched to long strangles into earnings. I started this past Monday. I’ve done “ok” and haven’t lost money (barely though - After two days of losses I’m still up 2% on the $1,400 I started with). Again, strangles looked relatively safe to me when I first got started. The way I saw it was that I was “protected” if the stock went up or down. I’ve gotten very familiar with IV crush along the way though. I've tried to be very disciplined. I've kept a trading journal (I attached a screenshot) and logged every trade, did not go too far OTM (other than my first day when I did not know better), etc. My calls on salesforce went up 3,700% on an almost 15% out of the money call ($44 to $1,610). That was kind of a fluke though as most of my positions were much more closer to being in the money. Without that Salesforce trade I’d be down considerably more. Since Monday I went in and out of 25 strangles going into earnings. My success rate (meaning I either made a profit or broke even) has been 32%. I’ve made “good” money (100% to 500% or more) on 3 of the strangles. I made 474% on URBN, 1,839% on CRM, and 208% on MDT. My biggest mistakes/losers dollar wise were BBY (it was overbought going into earnings) and CLCT (it was a stock with very little volume). One big challenge with Robinhood has been getting out of strangles fast enough. Thursday morning I was in 10 different strangles that reported that morning or Wednesday afternoon. Getting out of 20 legs was a giant mess and while most of the call legs were blown through and ITM. But, by the time I got out of everything by 9:37 or so I was down 21%. Is it worth sticking with strangles if they are outside of earnings? What other strategies should I learn?
At the moment, I can't really address most of your questions. But I will offer this opinion: Find another broker. Most brokers that will accept smaller accounts like yours offer free stock trades, and most brokers do not offer free option trades. And you get what you pay for. If you aren't paying any commission on your option trades, your execution quality is going to suck. And if you can, fund your account with at least $2500 or $3000, so you can qualify for a margin account, and that way you can trade spreads. BMK
Be very careful on strangles. In Jan time frame I took a major loss when I had a wide strangle on TSLA. If I could go back in time I would of made it an IC, and as luck would have it that was the only time that I did a strangle vice either selling puts or using an IC.