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1/n I run a systematic options trading strategy with the goal of generating 1% yield per week (50% annualized) on the cash portion of my investment portfolio.
A large portion of my portfolio is invested in high-growth stocks many of which are followed and discussed on Fintwit...
A large portion of my portfolio is invested in high-growth stocks many of which are followed and discussed on Fintwit...
2/n ....Given the high-beta nature of the portfolio, I keep a high cash allocation and use the above-mentioned strategy to generate 25-50% annualized yield on that cash.
The key components of my trading strategy are informed by:
Volatility (implied) decays and...
The key components of my trading strategy are informed by:
Volatility (implied) decays and...
3/n....mean reverts. The decay is slow and persistent, the mean reversion fast and furious.
Central bank intervention has exacerbated this dynamic and I don't expect it to change any time soon
Unless one is great at market timing (and I am not), positive expectancy...
Central bank intervention has exacerbated this dynamic and I don't expect it to change any time soon
Unless one is great at market timing (and I am not), positive expectancy...
4/n ...over the long run in options trading comes from selling options or, in my case, financing option purchases with option sales.
Key features/components of my current strategy:
All my options trading is directional in that I intend to make money from the moves...
Key features/components of my current strategy:
All my options trading is directional in that I intend to make money from the moves...
5/n....in the stock rather than its implied volatility.
I mostly trade spreads. In each spread, I sell more options than I buy or at least as many options as I buy. I rarely buy/sell options outright.
Typically, I have positions in 3-5 stocks each with 7-10 DTE...
I mostly trade spreads. In each spread, I sell more options than I buy or at least as many options as I buy. I rarely buy/sell options outright.
Typically, I have positions in 3-5 stocks each with 7-10 DTE...
6/n....at inception. So, each week I am trading options expiring the Friday of next week
The common theme to most (not all) core positions in this current regime: sell downside (put) and buy upside (mostly call spread) while paying zero/close to zero premium on the package
The common theme to most (not all) core positions in this current regime: sell downside (put) and buy upside (mostly call spread) while paying zero/close to zero premium on the package
7/n...Three possible outcomes can result in each position. Max profit is the most desirable outcome and getting assigned the stock is the least. I often select stocks I'd be happy to own. In most weeks I can exceed my weekly return threshold with 40% hit ratio....
8/n....I risk manage my positions to lock in partial gains, mitigate losses and occasionally to convert a losing position into a partially profitable one. This involves trading the stock or more options...
9/n.... Two things I don't worry about in my trading are technical analysis and tax efficiency considerations.
I will document live examples of my trades and positions, especially the tricky ones, so they can serve as an example, to me of how to or how not to manage them...
I will document live examples of my trades and positions, especially the tricky ones, so they can serve as an example, to me of how to or how not to manage them...
10...Disclaimer: My tweets are not and should not be considered investment advice or a solicitation to buy/sell securities. Trading/investing involves risk of loss, so please do your due diligence and invest at your own risk.
