Hello everyone,
For last about 4 weeks I have been consistently selling vertical spread puts and vertical spread calls on MAG7 and two to three other stocks based on market direction. I open them on Monday after 10:30 am and sell either put or call for coming Friday. I usually sell just one contract per stock. This makes about 5-6% weekly profits with success rate of 85% or little more. Each trade ranges from $200 to max $500 (based on width offered) , and I just do one contract.
I was thinking of scaling this up gradually which could be to add indexes and other stocks to my list to go for at least 25-30 different instruments instead of just 10 or 12 right now. Other option of scaling up could be using same stocks but increase the number of contracts.
I have these questions 1) is this the right strategy before I go too far and or invest too much ? 2) how the scaling up ideas are based on your knowledge and experience ?
Looking forward,
Before I over do selling the vertical puts and calls…
byu/Slight_Pie7773 inoptions
Posted by Slight_Pie7773
3 Comments
Nice weekly theta grind on MAG7 verticals; 5-6% at 85% win rate rocks short-term, but scaling to 25-30 underlyings or more contracts amps up gamma risk in volatile swings, turning premium collection into blowup fuel.
Past performance lies; one black swan (FOMC, earnings) wipes months of gains; 85% wins mean 15% losses could cluster and kill you.
Cap at 2-3% portfolio risk per trade, diversify underlyings max 15, and stress-test with 2022 vol spikes before scaling.
>For last about 4 weeks
Last 4 weeks have been the holiday weeks with very little actually happening. One of the calmest and easiest times to sell options. So i wouldn’t draw a whole lot of conclusions yet. Futures are red overnight over the Greenland tariff thing, and then next week there could be a Supreme Court decision on tariffs as a whole.
Scaling to more instruments wont help if they are all correlated, which they become correlated once a big drop happens.
I sell cash secured puts with good success beside swing trading and being outright long AI and related theme stocks. I am not initiating any new put sells because the US government run by a mad man is spinning out of control and anything can happen. I have been trading since the late 60’s and I sense this time it is really going to be different specially if trillions managed by robo tradres are getting loose at the same time. I have reduced positions, putting on VXX hedges and started putting on far out of the money bearish put spreads.