Well, I got home early and I was looking over everything and I thought I’d take a quick minute to talk about NVDA and give more insight into my perspective on trading. I got an overnight price of $130.39 that puts me down $1948.65 (6.77%), it’s not bad but I’m always looking for excuses to say something. I grabbed this Friday night, it's close enough to make my point. As I keep saying I want to target options no less than 0.5% and at the money NVDA Calls will net around 2%. Assuming the ratio stays roughly the same that gives a yearly premium potential somewhere between 26% and 104%. The probability of getting all the way to 104% is likely low. It's much more likely I’ll be able to keep my drawdown within a reasonable range until NVDA either flattens out or starts trending up again. Even if options premium fell off a cliff I can still still down with nothing fancier than a piece of paper and a pencil…okay, the calculator on my phone; and figure out how long it would take to get back to even and start making money again. I wouldn’t have to accept a loss on a trade. Set aside the fact that it would probably be more advantageous to find better premiums somewhere else. It makes for a very low stress trading style, and I like that.
Logged in to Schwab to see I have a new “401K and ESOP Plan” account on my summary page. As far as I know I haven’t changed jobs, I did start a ESOP plan back in July, but I thought that it was going to be handled by Morgan Stanley. Maybe this is a positive case of identity theft, I couldn’t sort it out one way or another and it's currently sitting with a $0 balance. If it is my ESOP it should have shares in it after January 1st. I’ll be happy if it is, I can manage it within my Schwab account instead of having another account to deal with. I added a Put to TOST. A Put just works better for what I want from a Wednesday trade. I want to add a bit more income, and if the stock is falling I am potentially lowering my cost basis. HOOD is a different story. I have been working on using MACD as a guide for my trades. The 2hr and the daily is what I refer to right now. I’m just seeing if it helps with entries, it's already on my charts and it can’t be any worse than just picking what feels like a good place to enter. Based on MACD it's not a good time to add to HOOD so I’ll just leave that spot left by exiting SQ open for right now and see what HOOD does the rest of this week. MACD strategy is going. I took a trade EOD on the 16th. It was a cross, it was just above the zero line. That one is still open. I took one yesterday but I mistakenly made it in the regular account, my bad. I took 4 trades off the minute chart this morning, that’s my limit for the day so I’ll be walking away from the computer and I’ll come back if I get some sold notifications. NVDA jumped up today so it looks like my thoughts last night are a mute point. Is it really a “mute point” or have I been saying it wrong my whole life? I did think it was “Nip it in the butt” until I was in my 20s. It is how I look at my trades though. Kind of like saying “If you shoot for the moon and miss you’ll still land among the stars”. I don’t know where that’s from, probably either a Disney movie or one of those motivational posters they hang up in work places. That’s where a majority of the truisms I know come from. Add T-shirts and bumper stickers and that covers all of them.
Down to $10691.73 (15.70%) Mostly being dragged down by NVDA -$1890.65 (-6.57%) I just took a little bit to look through my positions and set up a plan for tomorrow. I have to dip out early for an eye exam at 11am. Then since tomorrow is going to be the warmest day of the weekend I want to try to replace the thermostat in the Highlander; heat is nice to have. Toyotas are solid, 240K and it doesn’t leak anything. Still looks fairly clean underneath. My trucks leak pretty much everything, and both of them have severe issues right now. But I don’t need a Youtube video to figure out where the thermostat even is. It's right on top, easy peasy. Apparently toyota 3.5L V6s are on the side (front but engine sits sideways) and you have to take off a belt pulley just to have enough room to get the thermostat out and one of the bolts is blind. You can't really see it, you just have to feel your way back to it with a long extension. Should be fun.
Pre-Market thoughts: Over in NVDA I’m looking at continuing spitting the calls, I thought through it as best I can and it seems like a good strategy; but I still have to see how it plays out. Right now I am planning on keeping one strike at break even and rolling it out to 2 weeks. The other strike I will pick so the average of both strikes equals today's cost basis. That leaves some profit built-in and lets me follow the price down without the risk of losing money. I will have to pay attention to the premium if I want to maintain 0.5% a week since some of the trade is on a 2 week strike. I’ll look at HOOD the same way, but it’s not down as much and I might not need to split the strikes to keep it at today's cost basis. I’ll compare the 2 and see which one pays more premium and which one leaves me in a better position going forward. Pencil whipping it says splitting will get more, and its close enough to not have to roll 2 weeks out on the first strike. So I question now is: Is it worth it to be more aggressive? I can take money off the table by giving up the premium so far (if it passes the lowest strike). But will that actually help me make more money over a given period of time or not? Trading: I don’t have time this morning to play with MACD I did take 2 trades yesterday. Currently have 63 shares outstanding with an average cost of $40. So far this week I don’t think I have closed any, I’d have to double check that. I split and rolled NVDA. I looked at rolling the $144 C to 12/27 but it was only in the $20 range and rolling it an additional week averaged it out to slightly more than $41. I don’t have time to update my spreadsheet this morning I’ll have to go over that later. TOST I did manage to take my shares off the table with a small profit as they were dropping Wednesday. I got out of it with $83.23 so I just have the Put, which I rolled out and down to the first profitable trade. HOOD I did update the spreadsheet as I went cause Robinhood is a bit more of a pain to go back and pull up your history. I ended up splitting it and That meant buying the $36 strike which is ITM. My thinking right now is just attributing all premium income so far to the shares that will sell if HOOD stays above $36. This would give that a profit around $170 (4%) and I can reset the premium to $0 and keep my cost basis at $40.80 a share for the remaining shares. I like it for the simplicity on the spreadsheet (I just need a box discounting previous premium) and will let me still track total premium for the whole year. It also frees up space to reenter at a lower price, lowering the cost basis and I can rinse and repeat. The math works out, not sure about yearly returns. I haven’t worked this out on NVDA but I don’t see why that wouldn’t work as well. Anyway, all business today, again. The Shenanigans are not going away, I’m just short on time. You know how it is, end of the year, holidays, etc. So don’t worry, they will be back. Unless you hate them; in that case I don’t know what to tell you.
NVDA, its up, its down. Its f*cking Rocky (Balboa). Over lunch Friday I remembered I’m not going to have Wednesday trades for the next few weeks with the holidays so I went back and added some trades that I would have liked to reserve for Wednesday. My newly adopted way of approaching falling positions needs stress tested, and I’d rather find out sooner rather than later it is not working like I hoped. I added an ITM Buy/Write to TOST and HOOD. I could have done Puts for the same effect, I just like managing positions (stocks) more than I like Puts. I’m just ignoring that accidental MACD trade on the taxable side; the 13 share sell order. It will work itself out eventually. It will either hit or I’ll wrap it into my P&L when I move on from HOOD. Got my dividend From BP that bumped BP up to $85.96 (2.85%) on a one month trade. Initial buy in at $29.56 sold at $29.23. I have a handful of trades like this for 2024, it really cut my performance off at the knees on some of them that rebounded and I was stuck holding a strike less than my initial position. I still made money, but I ended up leaving a lot on the table. Since then I changed how I rolled options. I used to just do blocks (1 week, 1 month, 3 months, etc.) to keep the strike about even with the market price. I made a few adjustments for 2025. Last year I had an assortment of positions and I ended up with a variety of performances. Since I want to focus on capital appreciation, I am narrowing down to just high premium positions. I'll try to stay with stocks I think will perform well in the coming year. Right now my list is HOOD, TOST, ON, PLTR, SQ, and NVDA. I also have a watchlist of about 70 others and a Dividend watchlist of about another 70. I don’t currently plan on doing anything with dividend stocks, but I might do some dividend capture if an opportunity pops up. Honestly, looking over my performance for 2024 I don’t understand why people are hating on me for underperforming the S&P. Add back in the $3000 I rolled to the other account Taxable's $3093.44 is (25.08%) One of the Schwab accounts 23.44% this year and just 0.1% lower than S&P over the last 4 years. The second account is pulling down the results. It has always had more conservative results. To me, this means it's entirely possible to outperform the S&P with nothing fancier than selling options. It all comes down to stock selection. I think I can improve my stock selection process considering I don’t have any real metrics I look at when picking stocks other than options premium and looking to see if the chart is generally moving in a positive direction. And I have nothing against more complicated strategies, I’m just limited by my options level in one account and the desire for one cohesive strategy across the accounts (MACD is a side project). I can’t buy options in this account, all the data in the world saying buying options outperforms selling options doesn’t change the fact I can’t do it in 40% of my total account and I won’t be taking up multiple strategies while also working full time. Anyway, I’m halfway done replacing the thermostat. I’m actually completely done with that, even though it fought me tooth and nail. I had to go buy Crowfoot Wrenches, they’re stupid and I hate them. I couldn’t find a longer than average 14mm wrench anywhere, I needed something about 18ins to reach down and move the tensioner pulley and I went 3 places and had to settle for those and a longer breaker bar. It worked but it was a pain, then the belt fought hard not to get put back on when I was putting it back together. A longer than average 14mm ratcheting wrench would have made it a cake walk, again crowfoot wrenches are stupid. Now I just need to swap out a sensor on the opposite side of the engine and I’ll have heat again. The old thermostat was stuck open when I got it out, so the sensor is probably okay, but I have it and I’m this far into it might as well do it too. I’m going to tie mechanics back to trading soon, that’s why I keep talking about it. I just haven’t had time to type up another soapbox rant.
From 12/24 From 12/26 Took 2 MACD trades Monday and was up to 78 outstanding shares before HOOD came back up. I didn’t have a chance to take any Tuesday, but I had 3 outstanding positions close. Yesterday I took another trade and it filled along with 2 more outstanding positions. I’m down to 25 outstanding shares with an average stock price of $42.08. I’m watching the 5min chart today but I don’t know if I’ll get another trade in, I’m leaving early. Just a couple rollouts in the Schwab account. It was looking like I could close out positions on Wednesday, And I might have been able to do something, but it's a short day for me so rolling everything and just coming back next friday is fine. HOOD I did the same thing, I wanted to close out at least one leg and see where that left me but I had a hard out at 11:15 so I rolled it all. This weekend I’ll come back and go over the figures, as well as draw the line for my 2024/2025 performance. I go off of Friday's date so this is the last day of my 2024 trading.
2024 Results: $13,076.80 (19.14%) as of 12/29. Since Friday will be the 3rd I count the whole week as week 1 of 2025 for accounting purposes. Starting balances are $63,048.51 in Schwab, $12,316.42 in Robinhood Taxable and $5687.46 in Robinhood IRA. for a grand total of $81,052.39 These are the numbers I’m going to use to calculate the percentages for 2025. I’m still looking to maintain 0.5% a week and 20% a year. So I want to target around $16,200 in 2025 and end up with a balance of $97,000+. I think I could do better with some of the changes but I’m not sure. I don’t have enough trades to say I can, only the potential is there. Realistically my 3-year average 1st quarter return is 3.98% and last year was 3.55% (all numbers coming from Schwab). As for positions heading into the New Year: TOST is currently up 2.94% with an average strike of $37.25. HOOD is up 2.8% with an average strike of $38.33. NVDA is up 1.4% with an average strike of $140.5. I’m saying average strike because I am just adding the strike prices together and dividing by the number of positions. If the price is above the average at the end of the week I’ll let it go and come back Wednesday to jump back in. At least that’s my plan for 2025. All three of those were started at the beginning of December so it looks good. All 3 are below buy-in price and TOST and HOOD are both above average strike (based on Friday’s close on TradingView). MACD is ending the year up $153.40 (2.85%). Considering the origin and the trades left on the table over that period I am happy with MACD. I would like to switch it over to a dividend stock the next time it goes flat. I have my eye on C right now, but that would also mean adding more money to run the strategy as intended. Just something I have been thinking about the last few days. Still all business, I’ll have more free time after the New Year to write more.
Someone posted “The Man in The Arena” speech, and someone else commented that it was dumb and better to be the critic. I’m confused by that position, but maybe they are just trolling. I thought about saying something but I don’t want to get involved in battles of opinion. I was thinking about it though; and I do find it interesting all the different psychologies people bring to trading. Some people are here hoping to win the lottery. Some people are here grinding it out like it's a job. Some people are constantly changing strategies looking for an answer. It's all over the place, and we’re all basically trying to make money with our money. We are all being the man in the arena and not the critic (most of us). You can’t really get around that unless you just live in your parents basement the rest of your life. But are we daring greatly? What would be daring greatly in trading? I don’t think it's just piling on risk and hoping for the best. Something I’m chewing on before bed…
MACD performed in line with expectations this week: I also had a trade on the 30th that fell off of that screen before I could get it I double checked and the last trade entered for 2024 was on the 27th. I opened 3 trades so far today and 2 have closed. Total profit so far is $32.97 (0.58%) with 33 outstanding shares with an average price of $41.47. Over on the taxable side I ended up rolling out 2 to next week since that’s where the $37 strike option is. I was going to let some of the position go but I was going around in circles about it so I just decided to get everything lined up and go from there. In Schwab the Tost Put is looking like it might expire worthless so I just rolled the Call and kept it at $37.50. NVDA I could have waited to see if the price stayed up and let it all go, but there was money to be made just rolling. So far everything is in the green and total performance is up about 3-4% from last Friday. HOOD is up above the MACD zero line on both the 5min and 1min so I’m calling it a day. Already stopped and shoveled the bit of snow we got off the driveway since my son’s now lowered 2wd Ranger couldn’t make it up the driveway. My money is on him wanting 4wd by the time winter is over.
Here’s part of my my summary page for HOOD. Income - Options premium Equity - Income + positions current price Total - Income + strike price Sell - Strike price Top row is all positions combined and the average strike the rows under are individual positions/strikes. Positions are arranged in First In, First Out. Since HOOD is currently above the highest strike the whole position would close out with about $641.69 in profit (minus fees) on friday. If it drops but stays above $37 I can let one position go. On paper I would take $705.37 in profit and reset the income to $0 and start again. I’d also have a slot to add back a position (to maintain 3 positions). If its between $38.50 and $40 I have the option of closing the whole position or keeping 1 and letting 2 go. TOST Put expired worthless and TOST is currently above its $37.50 strike with $168.71 in profit for the whole position, I’ll add to it Wednesday to keep 2 positions. NVDA is currently above its strikes with $876.71 (3.05%) in profit if it stays above $141. Week 1 P&L is $1577.73 (2.09%) for option, $89.33 (1.57%) for MACD, total account is $1667.06 (2.05%).