"Volatility trader" trading result

thanks @KT3, we are doing the same thing again for Wynn last week. sold 91 put, got assigned. Sold 96 covered call. Wynn pop to 98. made money on the naked put, and covered call. and $5 on the shares it self.

Fingers cross this week, we just sold 103 Wynn naked call last week. just got assigned the shares this week. Hopefully we can get out below $103 on the shares this week while riding covered $98 put.

I can tell you the a lot of subs on c2 is not very familiar with option writing, assignment, and covered options. I get messages all the time “when did we short wynn?” or “what happen to my $w shares?” or “our options are expiring, what do i do ?”

3 Likes

@VixTrader…yes, Options trading is a different animal all together that some folks may not be all too familiar with, especially when you want to play with the BIG Boys by writing/selling them (and going naked, at that). :smile: Having the funds to able to do what you are doing definitely helps. Most folks don’t really know that’s how the Goldman Sachs of the world (aka the Big Boys) make their money, collecting premiums from writing calls and puts and then having the funds and time to wait things out if indeed they are assigned or assigned away the stock from those puts/calls and… then later playing the “other side” to try break even or actually make $$$ on the stock (in addition to the premium(s) previous collected). Great job again…and keep it up.

Thanks for explaining. Worked out well since W didn’t tank after you had it put to you. Provided W stayed above 40 minus the price of the calls the trade was going to be profitable. Would it also have been reasonable to sell the assigned stock and write more naked puts each week? If so, what made you decide to write covered calls instead?

i wrote covered call instead of naked put because i dont want to own anymore $W. Dont want to add more $ into the this holding. What if $w go down to $35, buy another 3k shares ? then im up to 30% on a single holding, that too dangerous.

I mean right now im still holding $LOW since $78. its been free falling ever since we got assigned. Same thing happen to us on $tgt. Target I had to cut loss after a patch of downgrades, i dont believe in their business model trying to head2head with walmart and try to compete in grocery mkt. plus they sold their most profitable part of the business to CVS.

I still believe in Lowes. i added large amount of shares my self outside of c2. Lowes buying Rona should boost forward PE by 15-20%. im just gonna let this run until it hits HARD stop.

Thanks for the answer. I was just saying that writing the naked put is essentially the same as writing the covered call. If you don’t want to own any more just sell it at a loss right away and write more puts. The result is the same as if you are holding the stock and it plummets while you are writing the calls. Please correct me if you feel that is not correct.

You are correct about they are very similar if you sell the assigned stock and sell stocks again. But getting assigned is part of my strategy, I sell naked puts around 3m, 6m or 200day support.

Example on my Wynn 91 put. We got assigned at 91, if I sold the shares and sold $85 naked put. Ok I made total of $1 from the 2 premium. But I wrote 96 cover call. So I was able to make $1 from premium and $5 from shares. Down side risk is limited for selling the shares is limited. But upside also limited. Max gain is the 2 premium. But when we got assigned at $91, Wynn was trading at $89. So we would took a $2 loss and wash the gain of the $1 premium. But max upside gain is $1. Selling a covered call give u upside capture. Yes, also unlimited downside loss. But I’m comfortable holding these shares at 6 month support, and keep selling covered calls for downside buffer while waiting on a upside rally.

And I’m willing to do the same on resistance also. Last week we sold naked Wynn 103 call. Wynn spiked to 109.55 at one pt. but I’m ok to get assigned at a 6m resistance. And now selling covered put against those shares.

Hi, thanks for the explanation.

So basically it was a bet that W would rise moderately as well as a play to capture premium above the anticipated rise? And in the initial leg of the trade you were accepting getting assigned if it happened because you were okay holding longer term since it was near support and if it didn’t drop below support and you didn’t get assigned you would profit from the captured premium on the naked puts?

Exactly. That’s pretty much 50% of what my strategy does. Getting assigned is part of the my plan. Getting prem from the naked option is part 2. Selling covered option after assignment is part 3, and selling the assigned shares is part 4.

If you just search for option to write for prem then you only have 1 chance of profit. If you dive in deeper There is more involve with odds and math probability of long option vs writing option and % of winning when planning a 4 stage trade vs 1 stage trade.

Good luck trading.

Your 4 steps strategy works well because

1.) you have the funds to cover when the naked option is “put” to you to buy (which you can later sell at your discretion and/or write a covered call on it).

2.) the market is skewered towards the upside most of the time (about 70-80%), so the odds are in your favor that if you are willing and able (time and financial constraints) to keep the stock (after being assigned via your put write) it will eventually work out (unless the stock just goes downhill without any turn back - e.g. via company bankruptcy).

3.) writing a covered call (as opposed to a naked put) puts you more in the driver seat as you are more in control and better able to decide if and when (time) to try to rid yourself of that stock (from the original naked put write) via a covered call (free premium) and then the stock possibly then being assigned away (at price of your chosen via the covered call ideally above the price that you were assigned from the naked put).

4.) continuing to write a naked put and being assigned an accumulation of stock you are not too keen on can be risky. with the covered call you may be getting premium equivalent to the naked put but are not at risk of accumulating more shares of the stock and forced to do anything further with the stock that you may not like or that you are not in control of your actions.

2 Likes

Hey, don’t give out all my secrets!

Lol…oops, sorry for letting the cat out of the bag a bit to the masses. It does take some guts, time and money though, which you seem to have. :smiley: Like I said before, that’s how Goldman Sachs of the world make their money. It is all about time, (money) and “pressure” (akin to “geology” as described in the movie the Shawshank Redemption).

1 Like

@VixTrader I’ve got a question

VolatilityTrader made a new all-time-high today. (341.7% within 6 months) which is amazing.

New followers with 100K have to use 22% of C2-AutoTrade-Scaling when they start now.
It will be even less percentage on AutoTrade-Scaling in a few months,
if VolatilityTrader continues to trade as profitable in the future as in the past.

Question:
Will there be a"rescaling" for VolatilityTrader at one point in the future?

Rescaling will be also useful for those followers (like me) that don’t trade options, because in a while we
have to “downscale” the C2-Autotrade percentage, since the returns are much lower without options.
(avoiding options was recommended by VixTrader when C2-Autotrade is used)

Yes. I’m still learning about scaling with c2. If things continue to be improve for us. We will definitely “down scale” for the new year. Which I have no idea how it works. Is it just a math thing within c2 or do I actually have to move funds back into my master account and “reset” the strategy…?

I do get direct message a lot regarding minimum req and what scale to set. 4% scaling and $15k for now is the lowest req if they want to participate in options.

Just did some searching on the forum during my 4h layover. Now I don’t know if I want to rescale. There is a lot of negative comments and post about rescaling. I will try to get a better understand how it works by emailing the c2 team. Also since this is a TOS account not just a # on a system, I have to figure out what to do with the funds.

It seems from reading the post on this forum. Rescaling down your system is mainly to focus on attracting more new subscribers at lower balance. Someone with less than 20k and might be a new trader. I don’t know if that’s the direction I want. Atleast not worth the hassle.

I want to keep my current sub community happy and focus on trading as my primary focus. Because sub fees is not my priority at all. It’s a drop in a bucket on what I make or lose on 1 trade. But growing and evolving together as traders with my current subs is become a hobby of my. Very fulfilling able to interact and build this online community thru this platform.

Long story short, after reading this forum now I’m leaning more on NOT rescale. But I will contact c2 help team and see what they say about some of my concerns.

4 Likes

I didn’t know that rescaling would be such a big problem.
Hopefully C2 team can help and ease your concerns.

Three months ago one other strategy I follow ( Quantimer VIX)
did a 50% rescaling, and everything went quite smoothly.
The advantage for followers was the possibility of taking profits,
and then to adjust the C2-scaling as they prefered.
Also current followers of VolatilityTrader might be pleased of this
possiblity if the strategy will continue to be very profitable.

Anyway, I hope I can follow VolatilityTrader as long as possible
if rescaling would not be possible next year.

Hi Vix Trader,

I don’t know if I ever will subscribe to your system but I would much prefer if you do not rescale. Rescaling can be very misleading to new subscribers because it does not show anymore the maximum drawdown in dollars in the past, a very important consideration and it does not show at what percentage and when the rescaling was done. A subscriber can change his scaling at any time according to his preferences, in other words there is absolute no reason for the developer to do it.

2 Likes

I believe this is incorrect. A new subscriber with $5000 won’t be able to match scale to a $600,000+ system since the minimum is 1%?, which is $6,000+. For a simple example.

About re-scaling, if one was to scale say 7% or so, one would not get the same returns because for instance the options , if you have purchased 20 options on a 450k account, for a 30k account, it would be a single option not 1.5

1 Like

I am inclined to think re-scaling it not a good idea. Also isn’t it possible for the subscriber to scale the orders as he wishes? As an aside, if someone doesn’t have 1% of the suggested amount, this might not be the right strategy for them.

The strategy might be fine. The strategy may work well with a low balance. It just may have grown so large that it makes scaling down to small accounts not possible, but that doesn’t necessarily mean the strategy should not be available to the subscriber with less funds. IMO.