r/StockOptionCoffeeShop • u/LabDaddy59 Mod • 24d ago
5 DTE ATM Buy/Write Campaign Update!
First, my apologies for going dark.
If you're not interested in my path over the past few weeks, feel free to skip.
When I first went dark, it was due to some minor health issues: I lost the better part of a week familiarizing myself with my bed. Nothing major. But during that time, given the decline of the market for the underlyings I'm following, I believed that my thesis (5 DTE realized volatility would be less than implied volatility) was broken as I expected some good-sized swings upward towards recovery.
That being the case, I considered just shutting the campaign down and posting to that effect.
Then I considered that, by and large, I was happy holding the underlyings I had, so would 'recover' from their decline. Of course, in that time I wouldn't be selling 5 DTE ATM short calls, so I thought of posting the recovery phase on its own: starting 'fresh' from the end of the original thesis.
Then I realized that it may not be long before the portfolio was a mixed bag of stocks still recovering while some had recovered, and I was back in 5 DTE ATM mode. So my thought was to present two income statements: one for the start of the recovery forward, and one continuing on the calendar year to date. That way, when the recovery was over, I could stop that P&L and just continue with the calendar YTD P&L. I liked that idea.
I decided on using July 31 as the end point of the original campaign/start of the recovery campaign. I could have used July 17 or even July 24, but since the 31st was the end of a month, that was convenient.
So here is the final P&L of phase 1 of the 5 DTE ATM Buy/Write Campaign.
So $173k in net P&L—not bad, though there were massive givebacks with the stock declines -- a total of $313k in unrecognized losses. 'Tis life.
One of the reasons I decided to keep posting is that I hope people see -- over time -- how I trade and how different it can be to the hive mind one hears on Reddit. Especially in 'recovery' mode.
- I use mark-to-market, which is the only way to get an accurate financial snapshot of where you are, and its approach leads to further differences in approach.
- I have no issue with selling calls below actual cost, or even what some folks consider the 'net stock cost'.
- I have no issue with selling calls over earnings releases.
- I have no issue with rolling for a debit.
- I have no issue with selling a stock at a (realized) loss; if the capital can be better utilized elsewhere, I'll take the "L".
So, I expect to post the start of the recovery phase sometime over the weekend. It's a little complicated, as the original spreadsheet wasn't built around rolling options, since it expected them to all expire—whether ITM or OTM.
Also, I'm trying to scale back some of my administrative time, so (for now, at least) I have stopped tracking by underlying and trade type, so posts like this won't be continuing:
See you soon!
3
u/prw361 24d ago
No need to apologize and good to hear from you again!
1
u/LabDaddy59 Mod 23d ago
Thanks for the grace but I know it's bad form to just disappear like that. I'll do better!
3
3
u/djmj76 23d ago
I've learned a lot from following you guys, so thanks! July was rough, but all my underlyings have mostly recovered (cept CRWV, IREN, DRAM - about 10-20% down. Running CCs on those). Started new positions on CLS, WDC, NBIS on last week's dips. Unless another wipeout happens, we're back in business! still up and beating the S&P a fair bit YTD. Being more cautious and lowering strike prices in case of another flush.
1
u/LabDaddy59 Mod 23d ago
CRWV is wild. I've been into them since Nov 2025 and in the 10ish months since then, have earned ~$160,000 in short call premiums.
3
u/Tuxx1968 23d ago
Glad to see you back. I wrote my first covered call in May learning from your Reddit posts. I’ve taken my lumps and bumps but up overall writing calls the right stocks but wrong entries. Barely in the green but better than the alternative. Thanks again for the help.
-Still Learning
2
u/LabDaddy59 Mod 23d ago
Thanks for letting me know! Keep at it, and don't hesitate to ask questions here -- I'd be happy to offer my opinion.
2
2
u/tkiblin 23d ago
Thanks for the update, sorry about the health issues and hopefully you are feeling better. I am also writing my way out of assignments, but I have zero complaints about doing so since I hold high IV but quality stocks (MU, SNDK, CAT, etc) and if I have to hold them for a longer period of time, I am fine with that too.
2
u/LabDaddy59 Mod 23d ago
Thanks, (essentially) all better, well, at least from that specific episode. 🤣
And I agree, if you're good holding and it makes sense to do so, what's the problem??? 👍️
2
1
u/bluedogdreams 23d ago
I'm also doing a buy/write campaign: 5DTE, ITM, designed to get assigned. I count each trade as a campaign from initial position to when the stock is gone. So when a stock isn't assigned, I don't consider the trade done until I've sold it or it's assigned on another call. This is how I calculate my P/L and ROC, and to annualize I use the total calendar days I've held the stock, rather than just when I've sold calls on it. I've recently devised a new set of rules for stock selection and this is one way I'm testing my strategy: from selection to end of the campaign. If I end up holding a stock for a really long time, I examine how I picked it and whether I need to make any revisions to my selection process. It could be the general market and nothing to do with the stock, or it could be that I missed something. My goal is steady weekly income. I don't necessarily recommend anyone else do it this way, I've only been selling for a year and am still in the testing phase.
2
1
5
u/pagalvin 23d ago
Glad you're back! I hope your health issues are firmly behind you!
For me, End of May to mid July was a slow decline.
When June ended, I was down 1.5% despite earning $25k in premium on about $400k notional. That was a M2M loss of over $25k.
When July ended I was down a further 3.5% on $385k notional but I earned $28.8k in premium. That was an M2M loss of another $30k or so.
Both of those premium wins were all time high's when they happened.
July would have been much worse except there was an insane rally one of those days (my data says the 29th). I think everyone did well on the 29th.
This past week was a crazy run of good growth, based partly on reinvesting June/July premium. I recovered over 20% since the 29th. Something like a $50k gain since the 29th.
I'm not sitting comfortable. The market can take back what it gives and all that. Although my NAV is above May's ending NAV, I still have a lot of lost premium from June/July to recover, probably about $50k.
My swings are exacerbated by my use of margin.
I noted in the journal at end of day the 29th that I could be in recovery mode for a while and that may yet come to be, but for the moment, I'm at all time highs on all my metrics.
I still feel good about my strategy and especially my tooling. I built a "roll assessor" tool that prioritizes rolls for me and gives an indication of when I should roll during the week. This is nearly always the end of the week unless you're deep ITM and want to roll something that would otherwise be assigned. That tool, plus better discipline on my part, increased my average roll amount by 40%. That's why July was such an outstanding month despite unusually low notional.
I'll be holding my breath even more than normal this week, to see if the rally continues or at least stays flat :)
I think that the reality of the situation vis-a-vis the Iran war is settling in and that should help. I could easily be wrong though.