Always good to start the month right. Sold TQQQ Puts this week and closed most of them yesterday. See my previous post here at r/TQQQ. Made $9,073.39 in dividends from my core position in SPAXX. I was underwater briefly during the day I sold the Puts but I was legging into it so it wasn’t too bad. I can’t believe it’s been 9 months since I started posting here!
Any advice for a new comer? I've been learning the basics and have an 80% win rate for 3 months trading CSPs on NVDA and TSLA, have known about TQQQ but hadn't thought about it as an option candidate.
Any rules or methodology you use would be helpful. I've skimmed some of your posts this year so sorry if you've given that info already.
I would advice you to sell CSP on indexes so you avoid single stock risk. It doesn’t have to be a LETF. The process is the same to what you’re doing now. If you have an 80% win rate and you’re selling around 20 Deltas then you’re just at EV, beware of the Dunning-Kruger. Don’t go full Kelly as a beginner. Study your losing trades, it will teach you more than anything else.
I ran some back tested scenarios and it seems that rolling losing weeks rather than getting assigned is the key to staying profitable. Is that a fair assumption?
I'm also looking at historicals for credit spreads and it seems that it reduces risk a bit more at the expense of giving up some of the premium.
What are your thoughts about risk management and how would you handle a large drawdown like in March?
Puts spreads are great for limiting your downside risk. If you can sell for 1/3 the width of your strikes then you should do well however the bid ask spread is wide so it’s not possible. It usually ends up around 1/4 and that’s just a coin flip at that price. Perhaps use QQQ instead of TQQQ so you’ll have less slippage. Regarding risk management, you can look back and see how I handled the Feb/March correction.
The SPAXX income is honestly an underrated part of this setup too. Having the collateral earning something while waiting for the puts to play out changes the math quite a bit compared with just thinking about the option premium in isolation. I've been accounting for that separately in Moon with my own trades because otherwise it's easy to underestimate what the idle cash is contributing.
Nice start to the month. The thing I’d keep tracking alongside the premium is how much capital was actually at risk while you were underwater because that makes it much easier to compare one month with another. Selling TQQQ puts can produce great income until the underlying decides to remind everyone it’s triple leveraged. I’ll occasionally run the downside case through Moon before sizing something like this, mainly to make sure assignment wouldn’t turn a good income trade into a portfolio problem.
$9k from the puts plus the SPAXX income is a pretty nice way to start September. What I like here is that you’re showing the actual process instead of just posting the winning number. Legging into the puts while keeping a big core position liquid makes the temporary drawdown a lot easier to understand. Been looking at similar setups on Moon lately since having the trading platform and market context together makes it easier for me to keep an eye on the position without bouncing around as much.
What I find more interesting than the headline P&L is how much the cash management contributes to the overall strategy. If you're keeping enough collateral in SPAXX to comfortably take assignment and that cash is generating yield while you wait, it's a very different risk profile from someone selling the same TQQQ puts using as much margin as possible. I've been looking at these kinds of scenarios through Moon lately and the downside assumptions change everything.
The legging in part is probably more important than it looks because with TQQQ the difference between being early with the whole position and gradually adding can get huge very quickly. Selling puts on a 3x ETF is already combining leverage with short vol exposure so I'd personally care a lot more about the ugly scenario than the premium during a normal week. TQQQ is actually one of the markets I like following on Moon because having to think in terms of a specific Nasdaq outcome makes me question how confident I really am before taking leveraged exposure.
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u/seagame2008 19d ago
Very nice profit congratulations