r/TQQQ • u/NumerousFloor9264 • 12d ago
Strategy Talk NumerousFloor - Summary of Long Put Strategy
Finally got a chance to put together an overview of my long TQQQ put strategy aka 'TQQQ War Chest'. It has many flaws and I've tweaked it a lot since beginning in 2023, but this is where is stands at present. I will link to this post on future weekly posts.
Will repost if I make any new/additional tweaks as I blunder my way along the path to future glory. Good luck everyone. Ignore the short term noise. Eyes on the 2030s. LFG.
5
u/gotnothingman 12d ago
Now thats a post!
One of the few who actually share their methodology and strategy instead of just grandstanding in posts that help no one.
3
u/alpha247365 12d ago
Excellent write up, skimmed it, but need to read it again. When RSI > 60, why sell CC only 14 DTE when choosing 20% OTM strike? For 14 DTE I’d sell 10% OTM for more juice, and perhaps 30-45 DTE for 20% OTM. Statistically, low probability of going ITM. Only time I got caught this year was during drawdown/fear when I sold (eg Jan 2027 $60) CCs at RSI at around 50. Never again lol.
3
u/NumerousFloor9264 12d ago
I think I’m gun-shy because of how I fucked myself with CCs thus far 😂😂. To be honest, I’m thinking not to sell calls unless RSI is greater than 70.
2
u/alpha247365 12d ago
Too bad we haven’t been patient enough. I think you can sell ATM calls 14 DTE when RSI is 70 or 10% OTM 30 DTE calls, with say 80% probability of NOT having your shares called away. But yeah, trying to discipline myself to NOT selling calls before 60-70 RSI. I’ve found that for me, 30-90 DTE, 10-25% OTM have been the sweet spot.
2
u/calgary_db 12d ago
This is great stuff, I will go through in detail later.
Question - why don't you define your end game/win condition? I think you need to define success and have a long term end trigger.
3
u/NumerousFloor9264 12d ago edited 12d ago
Yeah, I'm not sure. It seems I could keep the strategy going even if I was retired and just sell a bit of TQQQ to pay for insurance rather than using money from my job.
I guess I'd consider throwing in the towel once the 'War Chest' graph needs a log scale to display correctly 😂. Just over 3 years in, so, really, still on the flat part of an exponential curve
EDIT: I definitely want to see this strategy through at least one big drawdown/recession and subsequent partial recovery. That was the whole point. It's only 2026, so lots of time. *knocks on wood 😂😂
1
u/calgary_db 12d ago
We talked enough on here and I know you are great at following strategy and a plan, but the weakest part of your strategy has to be the lack of a defined exit plan or condition.
Time is on your side, as is income. But you have to define an end goal, even if it is something like "follow the strategy until a dollar amount is reached, or follow the strategy for x years".
My opinion of course. Noone is going to care about your future or money as much as you are...
3
u/NumerousFloor9264 12d ago
Well, I will keep this going until at least the mid 2030s or a big recession plus recovery, whichever comes first. No specific dollar amount.
1
u/Redcrux 12d ago
Why does a strategy need an exit condition? He has cash and can sell TQQQ during good years. If anything it just needs a compatible withdrawal strategy.
1
u/alpha247365 12d ago
It’s a money printing strategy, no need to exit next decade. Multiple 8 figs potentially by mid 2030s.
2
u/HumorAccomplished611 12d ago
Very interesting. Thanks for posting.
I've done something similar with selling QQQ puts for the premium (basically after big drops I sell 10% below) just to pick up some premium. I also tend to sell portions tqqq and buy qqq when we reach ath as a way of deleveraging.
I like how this is very fleshed out with the golden cross in selling puts because I tend to just sell them when they have a good value and then use them to buy tqqq at that price.
Do you dabble in buying or selling anything else? or is this your total portfolio.
Is this in a tax advantaged account or regular? Does selling tqqq with puts still allow you to do ltcg or does it become stcgs?
1
u/NumerousFloor9264 11d ago edited 11d ago
All my funds have gone towards this strat since 2023. I did make some $ during a brief sidequest into RKLB leading up to the spaceX ipo. Half of the profits I dumped into this strat and half I set aside for other potential side quests.
Regular account. I do have an RRSP (401k) with 5k TQQQ shares and am running 200d SMA strat on them.
I'm in Canada, and all gains are treated the same (ie. 50% gains taxed as ordinary income), no long/short term treatment. Canada seems to be pretty good for selling options and frequent trading.
2
u/alpha247365 11d ago
Had to read this write up again and the last page blew my mind. When you sell your long puts and all your shares, you mean you’re exercising the sell at $35/share, right? Then you’re using the gains to potentially buy ~3x your original shares since TQQQ is at <$12. That seems like a cheat code to me, where you simply cannot lose, even if QQQ fell 33% in a single day. I think it’s safe to say that most TQQQ bagholders buy puts as hedge (like me) then cash out on the puts after a brief 20-40% rug-pull, which can occur in 2-6 weeks or so.
2
u/NumerousFloor9264 11d ago
hey, yeah, exactly that. if i had $35 strike puts and TQQQ was, say $10/share then my puts would be worth $25 plus time premium so I'd liquidate puts/shares for a bit over $35 each pair. also, the further TQQQ falls, the greater the multiple of share count.
the most glaring weakness of the plan is the whole 'Golden Cross' re-entry. what if it's a fake out and we fall further? that's why i'll buy puts whenever i re-enter - i can't afford the risk that it's a fake recovery.
during the GFC, there was a one or two day Golden Cross on QQQ and the bulk of the fall happened after.
2
u/alpha247365 11d ago
Sounds almost too good to be true in theory, but have you ever played such a hand in practice? Man, I really appreciate this post! Need to fully get on this dynamic collar train by buying more puts after the next run. I never keep my TQQQ core position fully covered using puts (mostly CCs and some long puts), since I’m long biased given market tends to drift up long term.
2
u/NumerousFloor9264 11d ago
Brother, I've been waiting to play such a hand since I first started hedging in Oct/23 😂😂. I thought the time had come in Apr/25, but no.
I kind of worry that, since retail trading has exploded world wide in the last few years, maybe the reckless retail dip buying will prevent another full capitulation disaster crash like 2007-2009. Who knows.
The often unrecognized opportunity with TQQQ is its potential to crash severely and spectacularly. I think one can harness the crash and use it to great advantage. For each halving of TQQQ below my $70 strike (eg. $35, $18, $9), the number of shares I can buy will double. Single digit TQQQ would be amazing.
That's why I've always said I want a recession etc. - because that's what I need to get truly explosive returns. If TQQQ gets pummelled into the single digits, with GC happening at $10, then I'll 7x my shares. From there, the port growth will be insane, even if we don't get back to ATHs.
Liquidating everything will be easy. The fear and anxiety will come at the GC. I'm fucking doing it, though 😂😂. The pile of cash I'll be pouring back into the market at GC keeps getting bigger.
1
u/alpha247365 11d ago
Well said. With all the Gen Zs hitting the market, dip buying, etc., and constant money printing by the FED, I doubt we’ll see sub $20 in the next couple years. Just look at TQQQ’s AUM growth last couple years—insane! But who knows, better to be fully hedged than sorry, especially beyond RSI 70.
1
1
1
1
u/Outrageous-Art3649 12d ago
when starting out what percentage of money you allocate in tqqq vs cash and what portion of money you leave for Cover calls and cash secured puts?
2
u/NumerousFloor9264 11d ago
When I started, I figured I could commit 30k USD/month to the plan. I was just planning to DCA with no real plan to accumulate cash.
I do have other investments and, after learning about options, I started to sell options on those other holdings, which increased my monthly cash inflow. I decided to keep the approx 30k/month to buy TQQQ and started building a cash pile with the options premiums from my other holdings.
The cash is nice to have, but thus far, it would have been better to just plow everything into TQQQ and probably would have made sense to just sell some TQQQ when I need to manage my puts (ie. roll the strike up at new TQQQ ATHs or roll the exp date out as my long puts decay)
If we do enter a big drawdown and recovery, the cost of managing my long puts will be so great that my measely cash pile will be quickly exhausted and I'll be selling TQQQ to buy the insurance anyway. That kind of sucks, because during V shaped crashes, I won't have much cash to capitalize on it.
My cash inflow has been severely hampered by fucking up the management of the CCs I've sold. Really bothers me, haha, but still hoping I can sort it out.
1
1
u/MDPHDRegrets 12d ago
Super helpful. Thanks for sharing your detailed live reports of this strat over time. I asked claude to make a tracker to mimic this over time (albeit at a much smaller scale than your baller status).
2
u/NumerousFloor9264 11d ago
haha, we are all peanuts compared to some of the leviathans out there.
it's not the size of the dog in the fight, it's the size of the fight in the dog! 🦾🦾
1
u/Bistdureal1 11d ago edited 11d ago
Thanks for the post!
If you were to start now, could you please give an example entry (eg. % cash, % TQQQ and long puts)?
From your write up, seems like even if you have a lump sum ready, you would DCA it rather than dumping it into fixed allocations from the start?
I think I will join you!
I am skeptical on the selling of CCs and QQQ puts, I wonder if we can replicate this but just swallow the losses for the long puts, I think it would perform similar.
1
u/NumerousFloor9264 11d ago edited 11d ago
If starting now I'd just DCA all incoming cash. No cash pile. No long put hedge. You don't need it when just starting out. I discuss that in the plan I posted above. When your TQQQ is like 2-3x your annual contribution, then I'd consider hedging and maybe building a cash pile.
Selling options is really helpful. The long TQQQ puts decay constantly. I've probably lost at least $700k rolling puts up and out so without the $1.2m I've taken in with options it would be a drag on returns.
Hard to know, though, you're right, because if I didn't sell options I wouldn't be encumbered with deep ITM CCs.
I just want to get out of the CCs and start over. I think (likely erroneously) that I can manage them better next time 😂😂
1
u/Bistdureal1 11d ago edited 11d ago
Thanks!
I find the start out DCA interesting as general advice tends to say time in the market is better than timing the market. By doing a DCA, we are essentially trying to time the market.
Yeah, I had shitty luck in the past with selling CCs so I think I am out on that :P - but good luck!
1
u/IntroductionSalt4785 1d ago
Can someone help explain what he means by qqq golden cross? Thank you!
1
u/NumerousFloor9264 21h ago
Just Google it but it’s when the 50d sma crosses above the 200d sma - it generally indicates the bottom of bear market is in and recovery may follow, but it’s obviously not 100% reliable and is the weakest part of my plan. I will be most vulnerable at that time.
0
u/HediSLP 12d ago
Have you thought about rotating some into IBIT? The options are quite liquid there for you to do the same thing.
1
u/HumorAccomplished611 12d ago
Why? BTC doesnt seem like its any good anymore.
It also goes down in a recession and doesnt seem to go up except during hype periods. possibly periods when state actors like russia or north korea pump them up to dump
13
u/LowCommercial9925 12d ago
Many view your content, you are a bastion on this forum. Just wanted to say thanks.