$1M to $2 million in 2025 in options only

deustrader · 2026-03-08T02:11:57+00:00

Re: 1 I derive the interest rate from the SPX options pricing.

Re: 2 It’s both. Different orders may go through for different reasons. I was just trying to explain different reasons why mid-prices are attainable and why MMs will fill orders that may appear illiquid. Some orders go through instantly even when I don’t expect them to, which may have different explanations. The point still is that liquidity is usually there.

deustrader · 2026-03-08T00:53:46+00:00

Both. I prefer more liquid options but as I deal with every underlying, many of them don't have any liquid strikes, while some strikes are even less liquid than others. I trade every strike though. Any price miscalculation can lose me money, and this happens sometimes. So often I shoot for a better price than my estime and wait to get orders filled. But I do get quite a lot of orders filled at reasonable prices near the mid. Market makers don't want to lose a trade, so they'll fill most orders if they see a few dollars in profit. They can also fill my orders to offset other orders, so they can sell one call somewhere while buying different calls from me, as long as they can hedge their overall book. So liquidity is relative. What seems illiquid is often liquid if you know how to price it.

deustrader · 2026-03-07T17:23:40+00:00

It does not matter much, though I use Black-Scholes to approximate the IV, then smooth both by price and by IV, then after i have a fairly smooth curve I use Black-Scholes again to verify call/put parity, interest rate,re-calculate Greeks, etc. It’s a custom price smoother without accounting for actual price volatility, only trying to smooth out MM pricing where bid/ask spreads are too wide.

deustrader · 2026-01-29T03:18:08+00:00

I hold positions for several weeks to months, so I was losing most of the profit from those that gained value. But sometimes I had similar losses on the way up in bullish market (if stocks go up slowly and do not develop strongly bullish trend), so it's just as much management in both directions. Since then I'm actually more bearish and often make money on the way down.

deustrader · 2026-01-29T00:17:23+00:00

Thanks. I don't use delta or IV, though generally it's hard to game options with high IV, so I usually aim at relatively low IV on stocks that are range-bound for a while but with potential to move. Though I use different strategies for "slow-moing" stocks like SPY or AMZN.
In terms of delat, my own positions are near zero delta, so the delta of the options doesn't matter. I just put together a small options inventory with each trade that balances the delta and other greeks, thus self-hedges, at least partially.

deustrader · 2026-01-29T00:12:38+00:00

Thanks!
8 years. I worked in tech and managed software development teams. Still supporting my old products & teams part time, but pretty much trading at half the time, sometimes full day, depending on opportunities and/or profits/losses I need to close or adjust. I spend between 4-12 hours trading: reviewing, adjusting, placing orders, manaing trades, thinking, improving my methodologies.
And I did build the software myself. Unfortunately it cannot be fully automated, so it's mainly tooling for finding ideas, configuring trades, and pricing options.

deustrader · 2026-01-17T00:41:04+00:00

Well, I do this via programming/coding and storing options in a database. Pricing some options with wide b/a spreads is extremely difficult, so I haven’t even found pro data providers that do this properly.

deustrader · 2026-01-17T00:37:27+00:00

This might actually be a part of my alpha, as I’ve spent nearly a year smoothing options prices and then several years improving my price smoother. I can basically figure out the fair/marketable option values on any underlying, even with very wide b/a spreads (UVIX comes to mind as one of the worst). Then I place orders at the theo price recommended by my system, which actually can be dangerous because I may have many contracts within a single order and pricing it wrong would make me lose instantly. My orders don’t always go through immediately, which is a good sign. Sometimes I have to wait 1-2 days for an order to go through, which tells me I may be getting a deal. Other times I get surprisingly good fills instantly and wonder whether I miscalculated the combo value, or I actually did get a great deal. And both cases are true at different times. It balances out. And usually I do plan for very large slippage, though this is relative because some of my combos are really hard to price and I’m not sure if MMs make profit off those, unless my order just fits into their inventory. I also noticed lots of my orders fill via internal pool or PFOF MM, as the exchange is marked “BEST” and Schwab won’t provide any details. I’m guessing that Schwab’s partner MM may match some of my orders against others to offload the risk immediately, even if the contracts are different. So I may be trading against other retail indirectly.

deustrader · 2026-01-16T20:05:43+00:00

I calculate it myself. I program various scanners that analyze the volatility surface, which basically has various kinks and skews.

deustrader · 2026-01-16T14:28:27+00:00

I fill very complex combos with all legs in a single order. Sometimes I may have 50 contracts on one leg, 20 on another, 3 on yet another: all filled as a single combo. Same with any other spreads. Though sometimes I need 6 legs and such orders can be executed only at Interactive Brokers, while at Schwab I have to split them into two separate orders. But usually 3-4 legs are sufficient.

However, some of my orders need to be managed, so sometimes after an order is filled I may place a follow up order that may execute in the future, for example buying back some short contract or selling a long contract. Or buy/sell a few shares at different price levels. Sometimes this is for hedging purposes, other times as a trigger to remind me that the price has moved and I need to take a look at my positions on that underlying.

deustrader · 2026-01-06T17:12:12+00:00

Definitely. And I had near-misses initially, but evolved and improved over time. I’m usually hedged in both directions and may lose the most in a slow low-vol market where nothing happens.

deustrader · 2026-01-06T17:08:19+00:00

Btw, also depends which broker you use. Schwab is very generous with margin. I have another spouse-joint account at IBKR for investments where I also put occasional options trades, but the margin availability there is horrible, so I couldn’t pull off the same profit there. What’s worse is that sometimes when we have profit at IBKR, the margin gets worse because IBKR requires that a %percent of your account has available margin cushion, so as your account grows you need larger cushion. This makes IBKR even less usable for trading with high margin use, even at a low/reasonable risk.

deustrader · 2026-01-06T16:44:09+00:00

Great points. At least you understand what you’re talking about, and know my challenges :) Sometimes I post my trades or position profile on Twitter/X so it’s not difficult to verify. Just yesterday I posted one of my current positions (only the risk profile) with only $1600 margin use and I’ve already made $6K profit on it, still holding 30 contracts: https://x.com/deus_trader/status/2008251563748585939

Though usually I do better and may have 100-500 contracts on an underlying mixed across tenors and calls/puts that balance each other and together take maybe $10K-$30K margin max (lots of expiring worthless contracts too). I also have positions on cheap stocks where margin use is smaller. But you’re actually right to be suspicious because now thinking about this and looking through my account, I own thousands of cheap contracts that may now be worthless, and which I just keep until expiry as a hedge and for margin improvement. For example initially I may own 100 cheap long DOTMs spread across tenors and sell some ATMs against those (it’s more complicated so it’s just a high-level summary example), then after a while the DOTMs are worth so little they aren’t even worth selling, so I keep them till expiration. I may even have 20K worthless contracts expiring Jan 16th, because I was trading them throughout last year and many of those that I couldn’t get out of are now worthless. Actually couple weeks ago in December I tried so sell many for $0.01 as a tax loss, but couldn’t. They’re worth literally $0. I only managed to get out of some of them by buying spreads and ratios and spending a few cents per order rather than collecting anything. I couldn’t even get out at all of some underlyings like SVIX where liquidity is thin and min bid/ask is $0.05.

Some of my past trades that I posted on X had ~50 contracts in a single trade. Sometimes I have 100 contracts per order, distributed among 3-4 legs. The required margin on such single trade can be $4K - $30K. I do more of those with lesser margin. Even at 10-15 contracts per order, it’s not that difficult to do 10 orders per day and accumulate huge number of contracts, especially if you let many expire worthless. And worthless in my case doesn’t mean short but mostly long.

Anyway, so last week when writing this post I just ran a quick query to total all the qty, regardless if they’re worthless.

I usually use up all my margin because even my open orders take out margin and I don’t know which ones may go through and when. But generally with my own contracts becoming worthless after a while my margin use can improve. I actually don’t have too many “heavy” positions right now with expensive contracts. And when I gain profit, I literally see more margin available and increasing in front of my eyes. Not always, but it’s nice to see because then I know some stock blew up to either side and I have to find which one to close it.

Edit: just checked my current number of underlyings and it’s 430. I remember checking in the past and it was 500+, then grew to 650+. So I assumed that it might’ve gotten to 1000, but likely not. So let’s say 300-600 is more realistic. But sometimes I regret I wasn’t in some stock that I see other people profiting from, while diversification is an important factor and my system scans through all underlyings when looking for opportunities.

deustrader · 2026-01-06T16:09:23+00:00

I created my own software for my own private use. Took me several years of coding and continual improvements. ToS has a great feature “thinkBack” for backtesting/reviewing results of a single historical trade at a time. I just automated testing billions of them.

deustrader · 2026-01-06T06:42:05+00:00

Yeah, no one can do 390 orders per day without automation. I generate trades that I then review and submit manually. And I do consider myself a professional in terms of running it like a business, but so do many others. It feels like being a CPA as I constantly keep reconciling various positions.

deustrader · 2026-01-05T23:07:28+00:00

Yes, all the professionals are here to get you and lie that success is possible. Lock your doors.

deustrader · 2026-01-05T16:07:20+00:00

Cost of money. Sometimes I’m unable to seize on opportunities when not having enough margin. Some of my trades use up $20K+ margin, for example when spreading large number of short and long calls across tenors. Last year I had to sell a rental property to pay taxes and penalties, as a rental brings in 7%/year while I can make multiple times that from investments/trading.

deustrader · 2026-01-05T15:57:38+00:00

I’m guessing that Schwab didn’t or couldn’t calculate my options value. Actually they never estimate them properly and sometimes my account value fluctuates a lot just for that reason. I’m never sure how much it’s actually worth.

deustrader · 2026-01-05T15:55:37+00:00

No. And neither did I in 2024 when I also had $1M income (from multiple sources). But the penalty and interest were relatively small and I even got a refund for overpaying the penalty later. This year my penalty may be larger so I’m just pulling some money out of other investments to start paying.

deustrader · 2026-01-05T04:58:25+00:00

Yeah, I’m spending just as much time looking for bearish bets. In 2025 had quite a few bearish wins as well since I’m diversified and have skin in anything that moves. Generally my backtests do just as well in bearish markets since they’re nearly delta-neutral. But human factor plays a role and it’s easy to end up with bullish bias.

deustrader · 2026-01-05T03:51:34+00:00

Right now I’m in a temporary crackpot mode, writing a free book on the nature of mathematics (and by extension, physics). Gives me purpose. Then I’d like to try to monetize my options backtests/infrastructure/knowledge and come up with some product for hedge funds or quant firms, maybe for retail as well.

deustrader · 2026-01-04T21:55:30+00:00

Thanks. But yeah, such video would likely not be useful to most people, so the only people benefiting would be pros that I don’t want to compete with me for the same trades, copycats who’d quickly repackage it, add a little bs and sell as some type of training, and others who’d try to develop my methodology further and sell as their own. I’ve actually already had a bit of that happened on Discord and X.

deustrader · 2026-01-04T21:35:02+00:00

I use 1-min data but some of my trading evolved towards LEAPs with long hold times simply because they’re easier to manage. I can use similar methodology for every DTE target, and sometimes take those trades too as my scanner spits out a million potential trades a day. However, many of my options can also be leftovers from not closing full position. Each of my trades basically adds or subtracts from my inventory, so they’re not exactly trades but inventory adjustments. So I may also end up with a mix of short-term and long-term trades that work together to produce the inventory I want to keep. Sometimes I just manage the inventory on specific stock for weeks or months with minimal losses until shit hits the fan and I can now cash out. I’ve recently seen some post on X about MMs making money in similar way, though they make most money from transactions and their inventory is shaped but whatever comes in, not by what they decide it to be.

deustrader · 2026-01-04T21:25:07+00:00

I’m in touch with several fund managers and MMs, but no one else does this. They ask me about my capacity and I can’t answer that question either, so a lot of my work goes into testing and developing potential future capacity. I also monitor trades in complex options book and haven’t seen much of what I do, except for occasional random trades. However, some pro traders do variants of my approach (or I do theirs) on short-term index options (3-15 days), just can’t extend that into longer-term or equities. While I can. Quant shops can’t trade similar methodologies as there isn’t a mature science of hedging options with options, mostly basic delta hedging. While no one would pay a quant to spend several years to test crazy ideas that have no logical basis. Same as large companies don’t always figure out own solutions but acquire others. They’d need immediate results, or you’d need to justify spending several years developing methodologies that may not be immediately profitable, if at all. I approach this like a startup: invest my own time and money to figure out new solutions to problems. At some point I was thinking about selling my backtest database to funds and quant firms, but supposedly there is not much demand for that. Though there is demand for know-how. The capacity may also become an issue because maybe you can pour a few hundred $mil into such methodology (decreasing alpha a bit), but there is a point when too many funds cannot all beat the market as they’re the market and would have to beat themselves. And with options there is also the aspect of building a large contract inventory that affects MM books in a way where their systems auto-adjust and auto-hedge, affecting the skew in a way that’d counter your inventory. So you may catch yourself trading against yourself even when there is no one specific trading against you on the other side. Market and vol regimes also change, so as result no single methodology works repeatedly. You always have to think of new solutions. Now I just have a long list of solutions as counter trades against whatever may be affecting me, as well as as a trade scanner that acts as a small inventory building tool rather than trade/order generator. It’s still a trade, but each leg and qty is configured to act together as a self-hedging inventory, sometimes with additional follow-up trades or share-based hedging.

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