Music (listen to this while reading):
https://www.youtube.com/watch?v=jA4mTMKDY_w

(Editor's Note: The list numbers got messed up and I can't fix it. Sorry.)

tl;dr: If you don't know me already, I'm about $400k in capital losses. 2024 YTD - I did well, I lost it all, and now I'm back to breakeven. Big mistakes can cripple an account. Not necessarily a theta-only strategy.

After some serious missteps, I'm back to slightly above breakeven for the year and I wanted to share a PSA on how not to be a freaking idiot like I am. See below for comments on each arrow.

Chapter 1 - "Calendar Spreads" - I love calendar spreads. I know people poop on them all the time, but for my mental state, they offer me the best return because I don't need to do too much thought on when to close. It's a Thelta™ strategy (Theta Delta, no you can't have it I already trademarked it). They capitalize on WSB weekly plays while also offering you a reward for picking the correct direction on a stock as it moves upwards. Obviously, you also win if the stock is flat as the short leg loses value quicker than the long leg. You only lose if the stock rockets (bad case, but only if IV is flat or increasing) or plummets (worst case). At this point, MSTR and SMCI were going up insane amounts and the premiums were all insane. Also was using calendars on META and NFLX. Just started using calendars on post-split NVDA, pretty good so far.

My strategy is:

• Pick a stock I think we will go up
• Sell the weekly at strike price = current price 3 to 5%
• Buy the quarterly at same strike (or after whenever next earnings occurs)
• If extrinsic value of weekly is ever 20% of extrinsic value of the value week's option, roll to following week.
• Chapter 2 - "Red Numbers" - At this point, I was up $50k for the year (~140%) - As my portfolio size was increasing, so were my positions. My MSTR/SMCI calendars went from $13k each (1 spread) of net liquidity to $40k each (~3 spreads). In retrospect, there is no reason to do this, just trying to exponentially capitalize what was working. I had about 75% of my port in MSTR and SMCI calendars, and they both tanked about 40% in 2 days. I sold for a loss because I got scared, but in retrospect I probably would have been okay if I held since they both recovered the following week. Nevertheless, still a bad play. See Chapter 4 for how I handle this.

1. Chapter 3 - "Arbitrage is a Myth" - I was discouraged and mad, so I didn't really do much trading for the next month. I had some good days and bad days, but stayed relatively flat. Then, big bad DJT came around and I thought, "wow these premiums are insane. I just found the best arbitrage opportunity". It was some sort of short straddle with a short call, I dunno. Put premiums were high, call premiums were high, DJT is a scam, so how could I lose? Whatever it was, my bet was the DJT would go down, because duh. Nevertheless, the stock pushed through 60 like nothing, and because the liquidity on most of the options were abysmal, and I didn't want to have to borrow at 1,000% APY for a billion shares of DJT, I was closing my positions at awful fills and somehow managed to lose $25k on my DJT position (about 50%). For the following couple weeks I revenge traded a bunch of stuff and kept losing. Had some mental health issues, suicide watch (boring stuff don't worry about it), etc etc.
2. Chapter 4 - "Rebirth" - Early May I decided to go back to what was working and separate my remaining assets in two accounts. A "buy and hold and maybe wheel" account with Fidelity, and I kept my "Calendar / Vertical" account with the worst broker ever (Schwab). The former only has level 1 options and I sent a request to their support to prohibit me from going long any option position (so that I can only do CSP and CCs).

Doing this, I can allow the good companies to continue to grow without me watching them in my Fidelity portfolio. And by not watching them, I won't want to sell them prematurely like an idiot. Meanwhile, I can still get my dopamine fix by watching green and red lines all day long on my Schwab account. The biggest change I made was to remove any cash gained every week or so. I'm trying to keep my account at $30k at all times. Whenever I go up, I withdraw about 90% of what I 'won' so that I can't redeploy it, or I send it over to my Fidelity account. At this point, I have yet to go below $28k on the Schwab account, but I'll have to cross that bridge if it ever hits $25k. I know you people with 6/7 figure portfolios are scoffing at me right now, but I don't care.

End

Thanks for reading - love you all.

Out of the ashes, for now.