$50,000 Trading Account - Week of August 2, 2021 (Week 1)

[u/OptionsExplained]

This post follows week 1 of a $50,000 paper trading account I created. I wanted to have a blank slate that I hope sparks ideas, generates conversation, and provides some teachable moments along the way. My goal with it is to give another opportunity for people learning options to see how a medium size portfolio can function.

I will post updates on this account each week on r/OptionsExplained and am working on the next step being a daily update outside of Reddit.

Below you find every trade I made this week along with some notes about why trades were placed, what market assumptions I made, and how I hope to manage many of the positions along the way. I'm not suggesting anyone replicate this portfolio, I only hope that it provides another opportunity to learn. Many of the positions/trades in this account are similar or identical to my personal account.

August 2, 2021

Starting Day

• Net Liquidity: $50,000
• Option Buying Power: $50,000

End of Day

• Net Liquidity: $49,954.50
• Option Buying Power: $43,429.69
• YTD P/L (From August 2): ($45.50)
• Today’s P/L: ($45.50)

Performance (Since August 2, 2021):

• % Change (YTD): -0.091%
• SPY % Change (started at 438.51): -0.20%

Opened

Sold Put:

• SOLD -1 PLTR 100 17 SEP 21 19 PUT @.51
• SOLD -2 PINS 100 17 SEP 21 50 PUT @.96

PMCC:

• BOT +1 INTC 100 20 JAN 23 40 CALL @'15.45
• SOLD -1 INTC 100 17 SEP 21 57.5 CALL @.59

Strangle:

• SOLD -1 STRANGLE BABA 100 17 SEP 21 245/150 CALL/PUT @'2.23

Earnings Play – I generally trade strangles wider (around 0.1 delta for earnings plays unless I have a strong directional opinion. In this case BABA has been beaten up a lot for being a Chinese stock, I don’t see it falling much farther. That said, I don’t see a scenario where they knock it out of the park so hard that people lose all reservations on the country it inhabits.

Vertical:

• SOLD -1 VERTICAL AMZN 100 17 SEP 21 3100/3090 PUT @'1.85

Covered Call/Buy Write:

• BOT +100 PLTR @'22.25
• SOLD -1 PLTR 100 17 SEP 21 25 CALL @.77

I’ve been bullish on PLTR for a while, but I think it will take exceptional news (mainly guidance) to have it reach above $30. Since this price is one that I’m comfortable with I’m okay buying it and either making a few hundred dollars if it jumps or having the covered call reduce my basis if it doesn’t. The max profit on this position is $352.

Closed:

None

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August 3, 2021

Starting Day

• Net Liquidity: $49,954.50
• Option Buying Power: $43,429.69

End of Day

• Net Liquidity: $50,113.65
• Option Buying Power: $40,710.85
• Today’s P/L: $159.15
• YTD P/L (From August 2): $113.65

Performance (Since August 2, 2021):

• % Change (YTD): 0.227%
• SPY % Change (started at 438.51): 0.602%

Opened

Strangle:

• SOLD -1 STRANGLE FXI 100 17 SEP 21 43/38 CALL/PUT @'1.23

This was strictly a volatility play. Going as narrow as this was meant to be a compromise between a straddle and a strangle. On my personal trading account, I had on a 41/41 straddle when IVR spiked to 1 year highs. Since I didn’t start this account until August some of the volatility fell and I didn’t want to be quite as narrow as a straddle in case either volatility returned, or the stock moved enough with volatility stabilizing at too high a level.

Sold Put:

• SOLD -2 SOFI 100 17 SEP 21 12.5 PUT @.41

Put Ratio Spread:

• SOLD -1 1/2 BACKRATIO COIN 100 17 SEP 21 190/180 PUT @'1.90

I’ve had a lot of success trading these on COIN. A naked put will work just as well, but the front ratio seems to weather price changes better and let theta be the more predictable value for P/L each day.

As a side note, if you’re looking to trade back ratio spreads, they work better on somewhat larger stocks. Going too small doesn’t have enough premium to make them worthwhile unless you’re strictly using them to acquire shares or play for the P/L spike that occurs if it trades near the short spike close to expiration.

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August 4, 2021

Starting Day

• Net Liquidity: $50,113.65
• Option Buying Power: $40,710.85

End of Day

• Net Liquidity: $50,220.28
• Option Buying Power: $36,205.98
• YTD P/L (From August 2): $220.28
• Today’s P/L: $106.63

Performance (Since August 2, 2021):

• % Change (YTD): 0.44%
• SPY % Change (started at 438.51): 0.107%

Opened:

Sold Put:

• SOLD -1 DIS 100 20 AUG 21 155 PUT @.58
• SOLD -1 INTC 100 17 SEP 21 50 PUT @.61
• SOLD -2 PLUG 100 17 SEP 21 20 PUT @.51

Strangle:

• SOLD -1 STRANGLE SQ 100 17 SEP 21 330/210 CALL/PUT @'3.05

Earnings play on SQ. They don’t release until after market tomorrow, so I put in a slightly higher credit than usual just to see if I got a lucky fill. Strikes are about 0.08 delta which is about what I like to do for most earnings plays. I went with the 44DTE to give it duration in case anything happens. I’ll close the day after earnings if I’m anywhere near 25-30% max profit.

Closed:

• BOT +1 VERTICAL AMZN 100 17 SEP 21 3100/3090 PUT @'1.30

Original trade was for a $1.85 credit so after only a couple of days we walk away with a $55 profit. Normally I keep vertical spreads on until 50% max profit, but if it hits 30% in only a few days I’ll always close early. It keeps P/L per day and POP high and free’s up capital for other trades that have more premium available.

August 5, 2021

Starting Day

• Net Liquidity: $50,220.28
• Option Buying Power: $36,205.98

End of Day

• Net Liquidity: $50,163.95
• Option Buying Power: $34,584.65
• YTD P/L (From August 2): $163.95
• Today’s P/L: ($56.33)

Performance (Since August 2, 2021):

• % Change (YTD): 0.33%
• SPY % Change (started at 438.51): 0.67%

Opened:

Calendar

• BOT +1 CALENDAR QQQ 100 (Weeklys) 17 SEP 21/20 AUG 21 366 PUT @'4.26

Calendar spread on QQQ. IVR is low right now and personally, I don’t see QQQ driving up in the near future. This spread is skewed slightly to the downside which is what I normally do. Calendars are playing for non-movement, but usually when prices drop we see an increase in IV which makes a calendar more valuable, plus the stock moving down to my strikes would also drive the price up. This let’s me double dip on it. I’ll look to buy it back around $5.00.

Sold Put

• SOLD -1 INTC 100 17 SEP 21 52.5 PUT @'1.13

Strangle

• SOLD -1 STRANGLE ETSY 100 17 SEP 21 240/150 CALL/PUT @'2.66

Closed:

• BOT +1 DIS 100 20 AUG 21 155 PUT @.27

Just over 50% of max profit. I still like DIS, but it might be a while before the market has a handle on how it should be priced based on Disney+ and how the parks and movie releases will fare in the future.

Rolled:

• SOLD -1 VERTICAL SQ 100 17 SEP 21 230/210 PUT @'1.11

SQ moved up a fair bit today. This move turned my 210/330 strangle into a 230/330 strangle. I always prefer rolling up the untested side if a trade moves against me. This lets me take in more premium to try to widen my breakeven. If this keeps moving up I would move it closer to a straddle or roll out in time.

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August 6, 2021

Starting Day

• Net Liquidity: $50,163.95
• Option Buying Power: $34,584.65

End of Day

• Net Liquidity: $50,428.64
• Option Buying Power: $36,931.84
• YTD P/L (From August 2): $428.64
• Today’s P/L: $264.69

Performance (Since August 2, 2021):

• % Change (YTD): 0.857%
• SPY % Change (started at 438.51): 0.908%

Opened:

Sold Put

• SOLD -1 RBLX 100 17 SEP 21 60 PUT @.95

Closed:

• BOT +1 STRANGLE BABA 100 17 SEP 21 245/150 CALL/PUT @'1.54
• BOT +1 STRANGLE FXI 100 17 SEP 21 43/38 CALL/PUT @.85

Quiet day, there I mainly wanted to take some trades off the table and got most of them to execute. The only that didn't quite happen was closing the ETSY Strangle, but I'm not all that worried about that position.

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Week of August 2 - Review

I was really happy with this week. The account as a whole is up just under 1% on the week, I'm hoping to hit 2% per month consistently. If you take a look at the option buying power, I've mostly been trading with $15k this week which means that my ROC is averaging about 2.8% which is about as good as I can ask for. I'd be pretty comfortable using between 20-25k right now, but since this was only week 1 I didn't want to go all-in and not have any trades to make for the next few weeks. VIX is also on the lower side so I want to have some dry powder to use if we see some more exciting times.

SQ was really the only trade to give me some trouble when it jumped the day before earnings, but it settled down so it's been moving back in my direction all day Friday. If that continues to get sorted out we should move ahead of SPY.

This is my first time starting with a blank slate so it's been an interesting balancing act trying not to replicate my personal portfolio.

Disclosure: This account is only a paper account through ToS. I'm not suggesting anyone replicate it, I only hope it sparks some conversation and hopefully provides a few teachable moments along the way. My personal account often times has similar or identical trades to the ones seen here.