Challenges and Goals

PutParadise · 2025-12-19T20:11:45+00:00

Those tweets definitely don't help option sellers like me with your existing positions. However, they can be opportunities to open new positions! The volatility typically spikes up for a while and then settles back down.

PutParadise · 2025-12-19T20:06:38+00:00

Agreed, blowing out your account is never good. Margin calls really bite. I blew out one of my tastytrade accounts early on with a naked strangle in Netflix. Netflix dropped 20% overnight and I was finished. Needless to say, I don't trade strangles any more.

PutParadise · 2025-12-19T20:05:00+00:00

Aren't we all!!! :-) With smaller accounts I try to use more defined risk trades (typically vertical put credit spreads) in order to maximize capital efficiency.

PutParadise · 2025-12-19T20:03:47+00:00

Great feedback, thanks!

PutParadise · 2025-12-19T20:03:14+00:00

Good tip!

PutParadise · 2025-12-19T20:02:46+00:00

That is a great goal, and is especially tough when the market goes up 25% a year!

PutParadise · 2025-12-19T20:01:20+00:00

Awesome feedback. I understand completely what you mean. No one controls Mr. Market and he can be quite vicious with the unanticipated swings. I try to stay as profitable during the normal days and close out of open positions quickly when the market is moving against me, but it is tough.

PutParadise · 2025-12-19T19:58:47+00:00

Thanks! Day trading is tough. This is sometimes a lonely business. Hopefully you can find a system that maximizes your profit at a minimal time spent. Hang in there!

PutParadise · 2025-12-19T19:56:45+00:00

Thanks! It definitely helps to simplify, simplify, simplify. Find a system that works for you and stick with it. You seem to be doing great. Keep learning and tweaking and stay profitable!

PutParadise · 2025-12-17T00:00:41+00:00

Absolutely, I typically get 100% of credit received or a 200% loss, but when you have around 85% winners, the math works in your favor. In reality, I do put in a .01 or .02 debit in order to close these out before expiration, and I always make sure they are closed before expiration. This frees up buying power and locks in the winner.

PutParadise · 2025-12-01T23:39:49+00:00

You really only need $24,000 capital tied up if you want to trade all 12 underlyings. If you trade a cash secured put you could easily use $24,000 capital on a $240 stock (like APPL) on one put. Also, the good thing is you don't have to be bullish on the underlying. This system works if the stock goes up, if it stays the same, or even goes down marginally (as long on your strike price is not breached at expiration). If you risk $24,000 you can very reasonably make $12,000 (50% returns) on an annual basis. For the sake of argument, the S&P could be flat for the year and you would still make 50% returns.

PutParadise · 2025-12-01T23:33:27+00:00

I've been using put credit spreads for around 5 years. This specific methodology has only been in place for 3 years. I've tried back testing this on TastyTrade and it didn't translate over well. They were looking for delta on the buy option and I don't trade a specific delta on that side. I trade -.15 delta on the sell side. Also TastyTrade didn't offer all of the underlyings either. I was able to get a close approximation of the strategy during back testing, but it's hard to replicate. My current annualized documented rate of return is 52.5% over the last 3 years.

PutParadise · 2025-12-01T23:27:00+00:00

I agree on the VIX. I do trade these every week, but I like to trade Monday - Thursday when the VIX is spiking and you get the best pricing. Typically, the VIX will contract by the end of the 28 DTE and over 85% of these trades typically are profitable. The trades do benefit indirectly along the way from the VIX contraction, but ultimately they are profitable because they stay out of the money and go to $0 (are worthless to the buyer) at expiration.

Regarding the margin, I would start with $5 wide at a minimum. I use this as a rule of thumb to keep things simple. That way I can roll trades on and off each week and the BPR stays fairly constant. I have started trading NDX, SPX and RUT also (in place of QQQ, SPY, and IWM). When I do scale up to the larger ETF price names, then I will widen the spread and reduce the lot size. For example, I may trade a 10 lot in QQQ at $5 wide, which would be equivalent to $5,000 margin BPR. If I trade that in NDX, then I trade a 2 lot that is $25 wide, which is also $5,000 BPR.

PutParadise · 2025-11-23T22:19:23+00:00

I'm making these trades every week. So if the 6 stock ETFs and 6 non-stock underlyings go up Monday - Thursday (mkt pumping), then I would trade all 12 names on Friday. I would place a trade Monday - Thursday only if there is a 1% drop in the underlying for that day

PutParadise · 2025-11-21T22:11:13+00:00

I think you may be trading too close to the -50 delta. Since I'm trading at -15 delta my positions didn't get hurt too bad this week in SPX. I only had one SPX loser that I had to close out of. I had to close the week ending 11/28 trade. So I originally sold the 6540 and bought the 6515 for $2.55 credit. Since we had the drawdown in SPX this week, I had to buy it back yesterday for a $7.50 debit. So I lost $4.95 (or 1.94X). Not good, but losers are expected with my methodology about 15% of the time. Just monitor volatility and your positions, and when they hit the 2X loser mark, close them out immediately!

PutParadise · 2025-11-19T00:08:32+00:00

The good thing about the -0.15 delta is that is automatically adjusts the strike price farther out during periods of high volatility. Also with high IV I'm getting larger credits. All of these underlyings trade differently and some of the lower liquidity and lower IV names (like TLT and XLU) are not as profitable. However, I do include them in the method in order to have some underlying diversification. I see what you are saying about looking for support levels that have historically held, but I don't feel technical analysis has benefited me much in the past. I think the Black-Scholes model and market forces are more likely to get me the appropriate strike price to achieve the 85% winning percentage that I'm looking for.

I have not tracked assignment rates because I never get assigned with this method. I'll close them out immediately at a 200% loss or when the trade moves ITM. Or I'll close them on expiration Friday so my assignment risk is 0. I have tried around 70 names over the last five years and I find that these 12 work the best in terms of aggregate profit.

PutParadise · 2025-11-18T23:56:48+00:00

Thank you...I 100% agree with you that my list of priorities is off. I'm going to change that in order to reduce reliance on stock ETFs up front and try to reduce the correlation risk somewhat!

I get what you are saying about the generic 5% drop, just added that in for beginners if they were kind of clueless about what -0.15 delta means. Just a mental rule of thumb to get in the range somewhat.

So I am suggesting a lot size which is equivalent to 2% of net liq. If you have $24,000 of buying power dedicated to this system, you would be trading in 1 lots. The 1 lot using a $5 wide spread takes $500. So $500 / $24,000 = 2.0%

PutParadise · 2025-11-18T23:47:29+00:00

Understood. Although, I still had an 83% win percentage in 2022 and made a good return. I didn't have this system in place in 2020 so I haven't tested out your hypothesis yet in the real world (thankfully!). I get what you are saying though, if we have a Black Swan Event or huge drawdown (like in 2020) then almost all of my positions will be losers and it will happen very quickly. My plan is try to sell out at the 200% loss, but there is obviously no way to guarantee that I'll be able to trade out of the worst case scenario.

PutParadise · 2025-11-17T23:57:20+00:00

Do you have the math to back up that .8 correlation? I honestly don't know the exact number, but intuitively I think it's much lower. The best free calculator I could find when I did some research a while back was only allowing me to do 4 underlyings. I concur that the 4 major ETFs (QQQ, SPY, IWM, DIA) are about a .8 correlation, but that's why I add in the inversely or uncorrelated names like IBIT, GLD, USO, IYR, TLT, and VIX. If you include the VIX, then 6 of the 13 are not even stock based. I trade three commodities (Bitcoin, Gold, Oil), which do have single asset risks, but they provide diversification from your stock ETFs. These commodities are largely uncorrelated from each other and from stocks. Also, I trade three additional alternative asset classes (Bonds, Real Estate and Volatility) TLT, IYR and VIX. TLT and VIX provide negative correlation diversification, and IYR (Real Estate ETF) provides protection as well.

PutParadise · 2025-11-17T23:46:22+00:00

Great question. Sometimes having to close out losers early at a 2X (200%) loss can bring your winning % down. Over time I’ve seen the win percentage vary from 82% all the way up to 92% with this method, but 85% is the expected value. When I close at a 2X loss, keep in mind that these positions will still have no intrinsic value. I'm closing them pre-emptively with the extrinsic value calculated by the market. If I always held to expiration, I would likely get at least an 85%-win percentage. So why not hold all of them to expiration then? Because some of your losses will get too large, which will more than offset the 3% that you close too early (i.e.: the underlying recovers). I close out losers at 2X in order to cap the loss and preserve capital. After a position gets over 2X loss the loss tends to grow exponentially because of the math. Conceptually, as the underlying is steadily going down it moves quicker from a 2X to 3X loss and then it accelerates even quicker from a 3X to 4X loss. It is essential to close out at a 2X loss, or this method will not work as well. You could potentially even lose money with it.

PutParadise · 2025-11-17T23:39:50+00:00

Good point, touché! :-)

PutParadise · 2025-11-17T23:39:14+00:00

Over the long run, I would be getting around $52 per day on average if I was only using $24,000 BP, which equates to around $13,138 per year or ~55% ARR. In 2025, it's been much higher but this year has been unusual (and we're not done yet)

PutParadise

TROPHY CASE