It would seem to me that seemingly endless pages of back and forth clutter could be avoided if Howard posted the account balance when trades were made (they would have to be posted as well). Numbers don't lie.
I had two watershed moments. The first was the crash of '87 where for every stock that I sold naked puts on expiration Friday, I basically owned them on expiration Monday. The 2nd was the first time that I ever shorted a stock (it was Compaq). It was daily religious experience... Day 1: God, if you get me back to being only 1 pts down, I'll take the loss. Day 2: God, if you get me back to being only 3 pts down, I'll take the loss. Day 3: God, if you get me back to being only 6 pts down, I'll take the loss. Day 4: Is there a god ???
I did that. Not in absolute numbers but as percentages. The amount in this account is no-one's business. This repeated back and forth in this thread about me is a disservice to the OP. It has nothing to do with his questions. The other threads where this is debated is the place for it.
I think that your own analysis is pretty good. +30% is not too surprising, given the high probability trades. Yeah, you've been lucky, though. If I'm reading it correctly a recent R/R is 980/20. That's a terrible R/R and the trade has limited flexibility as it stands. It's like a time bomb. It's not surprising that your nerves are shot because this type of trade will either slowly make the .20 or you experience some heat, even though the bulk of the trades will be profitable. You and others who make these high probability trades seem to forget that size is a great mitigator of risk. So you put on high probability trades that you think will be safe, but at the same time you put on large size for the account - which increases risk. Personally, I'd reduce size and get better R/Rs such as 60/40. That trade has better liquidity and flexibility so you can trade around it. If you want to make money, you've got to take on risk. But you can make plenty with smaller size where the worst case scenario doesn't wipe you out. Classic thread, BTW.
BTW, I forget to mention the subsequent margin calls. I gave up a good number of stocks (liquidated to cover the margin calls) that had really impressive runs over the next few years. And who says that a good spanking doesn't reinforce the lesson ???
60/40? You are just pulling numbers from your ass. Could you post an example? 60/40 is too close to ATM or too long of a duration, the chances of a loss are too high.
Truth is it is just a sliding scale. The more risk you take the more you are compensated on it from yield. The less risk, the less compensation. I compare the various options to try to find the optimal expected return based on probability of touch/closing relative to r/r and base my decision on that, within some other rules. Basically, an attempt to find risk adjusted/expected return. But you can't just look at that. For these types of trades, you have to stay in the market a certain amount of time. To do that, you definitely have to look at the trends. You definitely can't just use standard deviation based probabilities. One clue is to compare the call side and the put side. If the "equivalent" spreads equidistant from the current underlying's price have different yields, it gives you an idea if you track them over time. If the call side has a 1% yield while the put side has a 10% yield, that tells you something worth listening to.