One year totals for Cathie Wood and one year totals for me

 Let's see how the "Cathie vs. Me" game is going today.  Cathie Wood's ARK Innovation ETF:

Me, sitting here working by myself.  Maybe Cathie should hire me as a consultant?

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Look, it's me! Look, it's Wood, Cathie!

Today's topic, same as in the last several infrequent posts, is Cathie Wood's ARK Innovation ETF (ARKK) against me. It's a one-year match and we've thrown in the indexes for perspective. Note the indexes doing better than Cathie Wood but not as well as me.

Cathie:

Me:

 

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It's been a while, but let's talk about me and Cathie Wood again

 Cathie Wood's ARK Innovation fund, one year:

Me, one year:

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Another difference between me and Cathie Wood

 Apparently I don't blog enough.  I can't believe I missed the chance to post this gem back in June 2021.  What will this June hold in the way of bragging rights?  Anything?

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The difference between me and Cathie Wood

 ... about 40%, that's the difference.

Cathie Wood's ARK Innovation ETF performance last three months:  -35.82%

Me, last three months:  +5.02%

Cathie, good luck to you.  You've got some work to do.  So do I.

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Reviewing the books

In my July 29th blog entry I talked about spreads opened since May 5th, but didn't include the breakdown for each one.  Here they are, plus the ones since then, up through August. The number of contracts was not the same for each trade, but they even out to being close enough to the same.  Taken all together, I tried to make about 15 cents per set of contracts, knowing I could end up making nothing at all or worse, lose money, or worst of all, face a possible maximum loss of 75 cents per set of contracts if all went wrong.  It turns out I made 10 cents per set of contracts (each set being a short call and a long call. With the multiplier of 100 for this security, that's $10 per pair of long call and short call.)

Here are some notes I took,including the level UVXY was trading either when I opened the position or sometime during that day:

May 5, 2021  May14th exp spread opened 8 days out, while UVXY at 4.43 
Sold to open UVXY May14th 4.50 strike calls at 0.27
Bought to open UVXY May14th 5 strike calls at 0.17
Max profit: $0.10  Max loss: -$0.40
Sold to close 5 strike calls at 0.01
Bought to close 4.50 strike calls at 0.11  Closed for completely flat

May 10, 2021  May21st exp spread opened 10 days out, while  UVXY at 3.98
Sold to open UVXY May21st 4 strike calls at 0.29
Bought to open UVXY May21st 4.50 strike calls at 0.19
Max profit: $0.10  Max loss: -$0.40
Sold to close UVXY May21st 4.50 strike calls at 0.04
Bought to close UVXY May21st 4 strike calls at 0.44  Closed for partial loss of $0.30

May 17, 2021  May28th exp spread opened 10 days out UVXY at 4.40
Sold to open UVXY May28th 4.50 strike calls at 0.49
Bought to open UVXY May28th 5 strike calls at 0.37
Max profit: $0.12  Max loss: -$0.38 Closed for Max profit of $0.12

May 21, 2021  June4th exp spread opened 11 days out, UVXY at 4.36
Sold to open UVXY June4th 4 strike calls at 0.63
Bought to open UVXY June4th 4.50 strike calls at 0.47
Max profit: $0.16  Max loss: -$0.34  Closed for Max profit of $0.16

June 1, 2021  June11th exp spread opened 8 days out, UVXY at 36
Sold to open UVXY June11th 36.50 strike calls at 2.705
Bought to open UVXY June11th 37.50 strike calls at 2.455
Max profit: $0.25  Max loss: -$0.75  Closed for Max profit of $0.25

June 9, 2021  June18th exp spread opened 7 days out UVXY at 33.81
Sold to open UVXY June18th 38 strike calls at 1.55,
Bought to open UVXY June18th 39 strike calls at 1.43
Max profit: $0.12  Max loss: -$0.88  Closed for Max profit of $0.12

June 16, 2021  June25th exp spread opened 8 days out UVXY at 30.85
Sold to open UVXY June4th 36.50 strike calls at 1.6733
Bought to open UVXY June4th 37.50 strike calls at 1.55
Max profit: $0.1233  Max loss: -$0.8767  Closed for Max profit of $0.1233

June 30, 2021 July9th exp spread opened 7 days out UVXY at 27.78
Sold to open UVXY July9th 32.50 strike calls at 0.58
Bought to open UVXY July9th 34 calls at 0.42
Max profit: $0.16  Max loss: -$1.34  Closed for Max profit of $0.16

July 28, 2021 Aug6th exp spread opened 8 days out UVXY at 28.41
Sold to open UVXY July9th 32 calls at 1.30
Bought to open UVXY July9th 33.50 calls at 1.07
Max profit: $0.23  Max loss: -$1.27  Closed for Max profit of $0.23

August 16, 2021 Aug20th exp spread opened 4 days out UVXY at 23.70
Sold to open UVXY Aug20th 26.50 calls at 0.41
Bought to open UVXY Aug20th 27.50 calls at 0.34
Max profit: $0.17  Max loss: -$0.83 Closed for Max profit of $0.17

August 16, 2021 Aug27th exp spread opened 9 days out UVXY at 23.70
Sold to open UVXY Aug27th 26 calls at 1.13
Bought to open UVXY Aug27th 27 calls at 0.99,
Bought to cover UVXY Aug27th 26 calls at 0.12
Sold to close UVXY Aug27th 27 calls at 0.07
Max profit: $0.14  Max loss: -$0.86 Closed for partial profit of $0.09

August 24, 2021 Sept3rd exp spread opened 8 days out UVXY at 23.61
Sold to open UVXY Sept3rd 26.50 calls at 0.96
Bought to open UVXY Sept3rd 27.50 calls at 0.82
Max profit: $0.14  Max loss: -$0.86 Closed for Max profit of $0.14

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Consistently doing better than Dow, Naz, and Essenpee

I'm not even having the best summer possible, but you'll see that I'm a nose ahead of even the strong Nasdaq. And that's with the indexes getting a half-month head start on me, since I moved from one account to another, with this chart picking me up where I jumped in with my competitors.

Why the large dips?  I sometimes set up spreads of different varieties that leave me temporarily in the lurch.  By design, they smooth out (unless they don't, but so far so good.)

Didn't change anything when moving, though (complete account transfer), and here's the detail before the early June move.

Some squawk and rail all day long about trading, and some of us just sit here quietly and do it.

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Another one coming in hot

I admit, I can't resist creating my own money. I like writing the check to myself and letting other people sign it. Sign it over to me, please.

Last week, started a UVXY credit spread comprised of calls sold at the 32 strike and calls bought at the 33.50 strike. After all, what if my idea is a bad one and I'll end up being the one writing the check to someone else?  Gotta limit the damage; thus the 33.50 calls.

What will happen tomorrow?  I don't know, but my record is good.  See this post and this post for rundowns of last year's adventures in serial credit spread transactions.  This is only a supplemental strategy in my portfolio. I'm not even having the best month possible, but it could be worse, so I'm not complaining too much. (Moved to a new account in June, thus the lack of May data.)

Slow and steady and repeated proven strategies wins the race. Is there a chance of reversal of fortune and erosion of my gains due to the relatively risky trades I am making?  Sure - in fact, I go in with high odds stacked against me, assuming I were trading a random no-bias upward or downward instrument. Understanding the underlying security is responsible for my repeated, reliable (over longer if not shorter time periods) and continuing positive growth.

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Create income with credit spreads

Let's look at a slice of time we will call May 5th through July 9th.  This represents eight weeks of short call spread management for which I have tracked data which is about to be unpacked in detail.

Of significant note is that VIX traded in and around the 19.00 point on both May 5th (the day I opened the first spread in this series) and July 9th (the day the last spread in the series expired.)

Selling call spreads on UVXY either just above the money or way above the money (well, as far above the money as I could while still collecting premium worth my while), I took on a risk that looked like this: For every dollar in maximum loss I might incur, I hoped to actually lose nothing but instead make 22 cents. 22 cents represents the maximum profit my spreads would make, in the hoped-for event they'd expire worthless after the credit (with debit netted against it) was deposited in my account at the outset of the trade. $1.00 in this equation represents the maximum loss I'd sustain upon exercise, should both call strikes expire in the money. That's the worst-case scenario for a short call spread.

In other words, to enter this room and play the game, I had to hold up a dollar, pledging to hand it over should I roundly lose the game. But I hoped to instead make, in the case of this particular series of spreads I opened sequentially over the eight weeks, a maximum of 22 cents.

As stated above, I didn't do this all in one trade; I opened eight spreads and let them each expire, except for two. Those two were closed by me before expiration because they weren't going well. As it happens, those were the first two in the series (way to start a baseball game by striking out for the first two innings.)  After that, the remaining six spreads came in for maximum profit, so the end result was: I didn't lose either the maximum $1.00 or any amount under it; I came out on the winning side. But instead of the maximum 22 cents striven for, I actually brought in 7 and a half cents. Yes, I only brought in about a third of what I hoped to.

Doesn't sound so great, right? Consider that I dealt with many contracts. So I ended up with +$, and I'm never going to complain about that.  

This was a series of trades in which the running profit/loss total changed with each new transaction. I started out with a result that was pretty much break-even, then took something approaching max loss on the next spread. I could have handled that one better, but I watched in resentful denial sprinkled with a good helping of wishful thinking until I finally salvaged what I could before expiration. Then, to cheer me up dramatically, the next six spreads expired in textbook max-profit fashion. When you're down in a pit, you can sit there and think about it, or you can start climbing out, which is what I did. I faced the fear (of additional loss) and pressed forward.

Why did I end up making a profit?  Was it because the underlying security went my way over the course of the eight weeks (nine, including time to expiration on the last)? See the VIX chart. It wasn't that the VIX declined - in fact you can see a dramatic spike which was not unrelated to my one bad outcome in this series - but the underlying security, UVXY, did decline between May 5th and July 9th. While I don't always know what the VIX will do, I have a reliable idea of what UVXY will do under various conditions as compared to the VIX. Understanding the movement of my security - not predicting it with complete certainty over all timeframes but simply knowing what makes it move and in what direction under different circumstances - allows me to employ a strategy with better chances of success than average.

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Updating the list of pranks I have so far pulled on UVXY

Another one added to the bottom of the list, changing the totals:

September 8, selling the Sept11th expiration:

Short 25.50 calls at 1.71, long 27 calls at 1.26, credit of 0.45

Max profit is 0.45 or $45 per block, max loss is 1.05 or $105 per block, closed for max profit

 

September 10th, selling the Sept18th expiration:

Short 23.50 calls at 1.92, long 25 calls at 1.55, credit of 0.37

Max profit is 0.37 or $37 per block, max loss is 1.13 or $113 per block, closed for max profit

 

September 11th, selling the Sept25th expiration:

Short 22 calls at 2.386, long 23 calls at 2.138, credit of 0.248

Max profit is 0.248 or $24.80 per block, max loss is 0.752 or $75.20 per block, closed for max profit

 

September 18th, selling the Oct2nd expiration:

Short 20 calls at 2.164, long 21 calls at 1.914, credit of 0.25

Max profit is 0.25 or $25 per block, max loss is 0.75 or $75 per block, closed for max loss

September 22, selling the Oct2nd expiration:

Short 25 calls at 0.884, long 26.50 calls at 0.732, credit of 0.152

Max profit is 0.152 or $15 per block, max loss is 1.348 or $134.80 per block, closed for max profit

September 25, selling the Oct9th expiration:

Short 24 calls at 1.45, long 25.50 calls at 1.21, credit of 0.24

Max profit is 0.24 or $24 per block, max loss is 1.26 or $126 per block, closed for max profit

October 5, selling the Oct16th expiration:

Short 22.50 calls at 0.90, long 24 calls at 0.68, credit of 0.22

Max profit is 0.22 or $22 per block, max loss is 1.28 or $128 per block, closed for max profit

 

October 16, selling the Oct23rd expiration:

Short 18 calls at 0.48, long 19.50 calls at 0.31, credit of 0.17

Max profit is 0.17 or $17 per block, max loss is 1.33 or $133 per block, closed for max profit

Adding these together, my goal was to make $209.80 per block, and I risked losing $890 per block.

All of the spreads were identical in quantity.  I lost on one and won on all the others, so my actual gain/loss netted together was a gain of $109.80 per block.

 

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Raking the money off the far side of the table

One of my strategies lately has been selling call spreads against UVXY.  Hunting for premium at, or preferably above, the current trading price, I set up 1 - 1.5 width credit spreads, and so far, all of them have paid off in their entirety by expiring worthless (I closed none early or for less than maximum profit) except one, which was assigned to me.  That was the day the president announced being infected and the market had a major conniption.  I could have handled that one better but I ended up taking the maximum loss on it.  Here is the list of spreads:

September 8, selling the Sept11th expiration:

Short 25.50 calls at 1.71, long 27 calls at 1.26, credit of 0.45

Max profit is 0.45 or $45 per block, max loss is 1.05 or $105 per block, closed for max profit

 

September 10th, selling the Sept18th expiration:

Short 23.50 calls at 1.92, long 25 calls at 1.55, credit of 0.37

Max profit is 0.37 or $37 per block, max loss is 1.13 or $113 per block, closed for max profit

 

September 11th, selling the Sept25th expiration:

Short 22 calls at 2.386, long 23 calls at 2.138, credit of 0.248

Max profit is 0.248 or $24.80 per block, max loss is 0.752 or $75.20 per block, closed for max profit

 

September 18th, selling the Oct2nd expiration:

Short 20 calls at 2.164, long 21 calls at 1.914, credit of 0.25

Max profit is 0.25 or $25 per block, max loss is 0.75 or $75 per block, closed for max loss

September 22, selling the Oct2nd expiration:

Short 25 calls at 0.884, long 26.50 calls at 0.732, credit of 0.152

Max profit is 0.152 or $15 per block, max loss is 1.348 or $134.80 per block, closed for max profit

September 25, selling the Oct9th expiration:

Short 24 calls at 1.45, long 25.50 calls at 1.21, credit of 0.24

Max profit is 0.24 or $24 per block, max loss is 1.26 or $126 per block, closed for max profit

October 5, selling the Oct16th expiration:

Short 22.50 calls at 0.90, long 24 calls at 0.68, credit of 0.22

Max profit is 0.22 or $22 per block, max loss is 1.28 or $128 per block, closed for max profit

Adding these together, my goal was to make $192.80 per block, and I risked losing $757 per block.

All of the spreads were identical in quantity.  I lost on one and won on all the others, so my actual gain/loss netted together was a gain of $92.80 per block.

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How to lock in a gain on that short while keeping it open

If anyone is curious about what I did with yesterday's trade, I walked it down the hill. Of course the sizeable gain on the short is tempting, but my goal is to keep this open and continue chomping bites off the downside, so long as market conditions allow.  Here is a write-up of the trade I described yesterday and today's changes.

As you can see, if next week the VIX-cano erupts, I can just exercise those calls and close the whole thing out.  Margin requirements would also increase on the position, should a rocky week force me to wait it out through share prices higher than the strike of my most-recently bought calls.  

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How to get a no-cost, risk-free short

Just kidding - nothing is free - and in this case what I gave up was a profit sitting there ready for the picking.  But I wanted to short this security without paying for the privilege, so without actually paying (so yeah, it WAS free if you don't count the profit I could have taken that I chose not to), I got what I wanted.

Everyone who knows me knows that I'm always trying to make money off the downside of UVXY.  Here are the nuts and bolts of how to attempt getting in for free:

Shorted a few days ago at exactly the price of 20.50 and also got calls against those shares at the same strike.  So the math (ignoring commissions) goes like this:

500 UVXY shorted at 20.50 is a credit of $10,250

5 UVXY Oct9th 20.50 calls were 0.89 each, or a cost of $445

Should Friday the 9th come, and the need to exercise arises, and there's no way to skim anything off either direction of those liabilities, the worst case scenario would be an exercise at 20.50, so no loss or gain on the stock, and the entire option cost of $445 flies away to bye-bye land.

After turbulent Tuesday, wishy-washy Wednesday and thrilling Thursday, UVXY went down the 18.00 sliding board and landed in the sand looking at sweet seventeen.  So today I decided, instead of taking a $500 or so profit that I could take (anyone thinking I'm foolish right about now?  It could be true!) I decided to pursue my dream of the risk-free, cost-free short.

Leaving the shares undisturbed so as not to alert them that anything is up at all, I stealthily bought 18.50 calls for next week at the going rate of 0.96 or another $480 debit to me.  Bringing in the consolation prize of just 5 cents on the previous options netted $25, bringing my new total pile of options cost to $900.

But since my new strike is 18.50, should I have to exercise next week, I'd bring in $2 per share on those shares shorted at 20.50 for a $1,000 boost to my account and a total max loss of $900 on the options, for a $100 gain overall.  I consider this basically flat, or a chance to keep this short going and hope that eventually I can expand the size and widen the gap between my costs and worst-case profits.  Who knows what the future will bring, but I started three days ago with nothing but an idea, and now I'm in the game for free.

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Nerve Tester

It was a nerve-tester yesterday and even today (see orange arrows for a few examples of un-fun moments):

 But the end-of-day report was a good one:

Prices on those things as of 3:59 PM:

 

Another one brought it for total maximum profit.

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I simply hoped I wouldn't botch it

Ringing the register, closing the till.  Til next week.  Happy weekend to all fellow traders - may you celebrate your good trades, or forget your bad ones and look forward to future good ones.

I made a wager, I took a bet. I think this was the best one yet.  

I didn't sweat, I didn't watch it. I simply hoped I wouldn't botch it. 

Ledger sheet sees nice black ink. Next week could bring red, I think. 

One day's problems at a time. And don't say everything in rhyme.

Truth:  This is what I DON'T look like all week, looking at my trades:

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Should I just give up?

I think of myself as someone who makes reasonable efforts to keep up, or who really just stays near the forefront effortlessly through my default state of absorbing and reading during each waking moment the same way I breathe on a constant basis (doing the latter even in my sleep), but obviously I have slipped behind if I failed to notice "Fintok." If the financial advice is now being dispensed on TikTok, I should just turn in my keycard right now.

Had it not been for @chigrl letting me on this, I'd forever be uninformed.  Financial community - Stop the ride!  Let me off!

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Another day, another 96 cents (per contract)

Instead of combing the halls of Twitter for wit and wisdom, today I'll simply paste a copy of my doings that turned out to provide a little Friday paycheck (but could have sent me down the hall for a visit to the Principal's office or at least a red-ink reconciliation in the accountant's office.)  I went out on a limb yesterday and came back in, and I brought back a little bit from my hunting and gathering expedition.

The profitable life isn't a predictable life, and while I could just pick up pennies in front of the steamroller as some underwear trader accused me of last week, it's not my style, so I prefer to suffer through middle-of-night future-checking and pre-market wake-up times, and also daytimes sometimes too stressful to remember to eat, so I can go for the dollars and not the pennies.

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Ramp or plunge?

The age-old question plaguing weary traders at the end of the day when all the coffee has been run through and the dreams have been dashed (or fulfilled with maniacal loud proclamations) - will the day end in a ramp or a fizzle?

Here, some keyboards have been slammed and a few curse words uttered.  Would that be surprising?

Looks like both Pete Phillips (@pistolsout) and dave dave dave (@davedavedave224) were right.  And the majority of voters (including myself, voting without looking just so I could open up the poll results for display) were wrong.

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Commentary not investment advice

Today's impression of the markets comes from Jeremy N (@jbergASU), hailing from the esteemed university of AS and also the university of SDS, calling the S&P's observed chart activity, at least as of 1:15PM Eastern, to be representational of a top.

 

 A reminder from Jeremy is that his commentary is not investment advice.

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Where she stops, nobody knows

As after-hours trading is a little elevated, Twitter pundit "D" (@FigureNyenterms) of the inscrutable handle and display name provides a hazy, clouded magic-8-ball-style prognostication for the morning (I think.)  Since there wasn't much punctuation, his (or her) reckoning is open to interpretation.

Now, I don't know who would be in their pajamas at four in the afternoon, other than those who never shed them throughout the duration of the day.  And I strongly suspect that "D" is, in fact, in pajamas if anyone is.  But the important point here is the sentiment:  That the open will be lower tomorrow.  We all put our pajamas on one leg at a time, and none of us really know what's going to happen, but there's a good chance "D" will wake up doing the "Told You So!" strut.  

 **Edit:  Clarification from FigureNyenterms says that he is trying to outsmart the pajama traders who are interpreted to be voting with their trades for a lower open, while he sees the open higher. **

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