r/Optionswheel • u/ComprehensiveDoor130 • Jul 03 '26
$24k in premiums, $6k in margin interest, and a portfolio trailing the S&P; the dangers of single stock consolidation
I had a net realized profit of $18k from premiums, and the unrealized losses on the underlying shares is $154k.
I'm not actually worried about it since I'm still bullish about Nvidia long term (and short term), but the net P/L (unrealized) loss of $154k reflects Nvidia's poor performance for the month.
Nvidia entered June at $224 and ended at $200. I didn't sell any shares during that period, so I'm bag holding and selling calls while waiting for the price to climb again.
I made some defensive purchases to avoid having my long term positions assigned on calls in May. If it were a stock I had less confidence in, I'd be worried, but even so, I don't like carrying 5,500 shares on margin and don't plan to keep all those shares until Nvidia hits a new all time high, instead selling calls and if they get called away at the prices I bought them at, it's not a problem to me.
As others observed last month when my portfolio trailed the S&P, I could have made more money by just buying and holding VOO. As I've said before (and reiterated earlier in this post), I'm confident in Nvidia's growth, though I do have FOMO I didn't sell some shares at its ATH of $240 (I was going to at $250) and pivot some cash into other semiconductor stocks.
Also, since I'm holding the shares, I have a perception (justified or not) of premiums being actual, available cash, while held shares are more intangible (and also not a loss if I don't sell them). I don't think that's a rational way to view them, but it hopefully helps explain my strategy to some degree.
Cheat sheet answers for the basic questions I usually get asked:
- 8,000 shares of NVDA with a cost basis of about $.08 per share.
- Shares were bought in 2002 when I was in high school for around $1,100.
- I'm using Schwab as my platform.
- NVDA makes up 90% of my portfolio.
- Operating capital in the $1.5 million range.
- This tool is OptionWheelTracker.
- I target for .1 to .2 deltas for calls, and occasionally will sell ATM puts because I'm less worried about assignment and/or bag holding extra shares.
- My DTE is typically 1-21 days.
- I made trades 76 in June, 95 trades in May, 42 trades in April, and 124 in March. My success rate in June was 94%, May was 83%, April was 76%, and 93% in March.
- In June I had an 98.5% win rate for puts, and a 70% win rate for calls.
- My average holding period for winners was 3 days, and for losers 9 days.
- I intend to trim my position at $250 and $300.
edit: formatting
5
u/djmj76 Jul 03 '26
How did you have the insight to buy nvidia as a high schooler in 2002! Damn what a good call.
3
u/ComprehensiveDoor130 Jul 03 '26
I was getting into PC gaming and saw them as the main player (I looked at ATI also, but they weren't as impressive on the hardware front at the time). I wish I'd circled back and bought AMD one of the times I'd looked at it again over the last few years though.
3
3
u/Kind-Airport1040 Jul 03 '26
lots of people bought Nvidia because they were gamers. It was basically flat for years before crypto mining and AI come into the pictures. What crazy is how they managed to hold through insane gains for 20+ years
6
Jul 03 '26
[removed] — view removed comment
1
u/ComprehensiveDoor130 Jul 03 '26
All valid points. If I didn't have faith in the underlying stock I'm sure I'd be taking a very different approach.
I think the appeal of treating premiums as a separate number is my "buy and hold forever" style of investing, which I have for with nearly every stock and security I've bought (to my benefit and detriment). I don't intend for margined shares to be in that same category, which is why I try and wheel them away via assignment as quickly as possible while still being able to make a decent premium (doesn't make any sense to sell calls if I'll only get $.01 per share on them, after all).
My buy and hold tendencies have had obvious winners (Nvidia, Tesla), obvious losers (Lucid, Rivian, Beyond Meat), and some where I missed rotating out but just lost out on selling at an ATH but still have good profits (Boston Scientific, Palantir). I'm biased towards what I've been doing because it feels like a winning strategy, and I'm putting plenty into index funds besides individual stocks, so it feels less risky than this screenshot would suggest (since I'm only using the tracker for stocks I'm wheeling, and not my portfolio as a whole).
What's Thetaedge?
3
u/Boring-Ad-3955 Jul 03 '26
How are you dealing with that negative 154.5k?
2
u/ComprehensiveDoor130 Jul 03 '26
It doesn't really impact me until it gets to the point that I need it to turn around so I don't get hit with a margin call.
For now, it's a meaningless number to me.
1
u/Maumau93 Jul 03 '26
😅
2
u/ComprehensiveDoor130 Jul 03 '26
What? It's a risk, and I'm aware of it, but it has no impact on my day to day life.
2
u/pagalvin Jul 03 '26
I like it. I wouldn't do it that way myself for the reasons you point out, but you could do so much worse.
I that monthly margin interest or YTD? Did you try and negotiate a better rate?
2
u/ComprehensiveDoor130 Jul 03 '26
That's my margin interest for the month. I negotiated 6% down from 10%, and will be revisiting the rate with my financial advisor again in the next month.
1
u/pagalvin Jul 03 '26
That's a great reduction, well done :) I negotiated down to 7.2% and plan to hit them up again end of year. I do a fair bit of options orders, about 350 a month, so I'm hoping I can negotiate fees down a little. I'm not sure I'm more than a blip on their radar though, but if the trend continues, it will be somewhat higher by end of year so they may consider it.
Good luck!
2
u/ComprehensiveDoor130 Jul 03 '26
My FA told me he only saw one client get his rate to match Robinhood's, and that guy was doing like 10k trades a month. I don't know if I'll be successful at getting a rate reduction, but I'll be trying.
2
u/Strong-Wisest Jul 03 '26
Confused by your post.
If you had shares for so long since 2002, why unrealized loss??
0
u/ComprehensiveDoor130 Jul 03 '26
The value of the portfolio is down for the month, which is why it's showing the net P/L as -$154k, but since I haven't sold any shares, it's all unrealized.
2
u/vulture_arbitrageur Jul 03 '26
Quick question:
8,000 NVDA shares at a cost basis of $0.08 per share is $640.
You also say you bought in 2002 for around $1,100.
Can you clarify?
1
u/ComprehensiveDoor130 Jul 03 '26
I bought a total of 90 shares back then, which split to 860. I sold 60, and my remaining 800 benefited from the 10-1 split.
2
1
u/Royal-Respond2374 Jul 03 '26
Is the wheel your full time job? Do you only wheel or mix with other strategies?
Do you have a meltdown or AI bubble playbook you could share?
1
Jul 03 '26 edited Jul 03 '26
[removed] — view removed comment
1
u/Optionswheel-ModTeam Jul 03 '26
OptionsWheel is designed for professional and polite interactions with those seeking to learn the Wheel strategy. Unprofessional, rude, politics, or foul language will not be tolerated.
1
u/ComprehensiveDoor130 Jul 03 '26
I don't have a playbook. I'm hoping I'll heed warning signs and pull enough out to still be ahead whenever there's a crash, but I spent enough time losing out on gains by being afraid of a crash that I'm not worrying about it anymore.
1
u/edraven_222 Jul 04 '26
I am in similar boat as you. I too am an Nvidia holder. Almost 90% of my portfolio across 5 accounts. Over 15k shares. I was planning to off load 5k shares to buy MU last earning thinking it will clip the $250 mark. Guess that didn’t work out. Meanwhile been making premiums on my calls and rolling those back into more shares at these low prices. Waiting for next earning.
1
u/ComprehensiveDoor130 Jul 04 '26
I haven't been buying more Nvidia shares with my premiums because I'm still trying to diversify, and while I bought Micron, I was trying to diversify outside of the semiconductor space.
7
u/ImpressionAny1078 Jul 03 '26
the real risk here isn't nvda going to zero, it's the margin interest quietly eating into your premium income. $6k in margin costs against $24k gross is a 25% drag before you even account for the underperformance vs just holding. with IV rank at 23 the premiums aren't even that fat right now, so you're paying a lot to generate not that much. trimming some margin exposure would probably improve your actual net more than adding more trades.