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Since the year is drawing to a close, I am reviewing my finances for the year. Naturally, I want to see how well I did trading options. I am pretty much exactly following Big ERN's strategy of options trading throughout the whole year with a small number of periods of interruption due to vacation. I re-read the Part 3 article ( https://earlyretirementnow.com/2019/03/27/passive-income-through-option-writing-part-3/ ) where there was a chart showing how much net profit he kept for every $100 of gross put option premium. My own figure this year is only $11. That's worse than every single year on that chart. My biggest losses of this year occurred on Apr 22, June 10, Sep 13, May 18 (in that order). Still better than S&P 500 though—at least I made a profit not a loss.
How's everybody else doing?
This year was a humbling experience, no doubt. I'm also up on the year (referring to the option portfolio, of course), after finally managing to crawl out of a bad drawdown in October. I only had 3 big losers in the following order: April 22, May 19, and Jan 6 (the last one I closed early.. bad call). Especially April 21-22 really showed how the options market can sometimes misprice certain scenarios.
On the metric of net profit out from $100 gross, I managed to keep $30. Not horrible, but also not great. I had more success with selling vol in other spaces this year.
I don't know whether it's the market or not, but since the introduction of 1DTE options, this strat has become much easier to deal with. All those losses above happened due to a combination of 2 down days, one after the other. With 1DTE, this is no longer an issue.
I'll write an update early in 2023. I'm up $60k. But with steep drawdowns on precisely those dates you mention. That $60k is from selling a total gross option premium of about $170k. So, only about 1/3 premium capture, the lowest hitting rate so far. But After a 90% premium capture in 2021, I knew this kind of largesse would not last indefinitely.
The upside: in the second half I've traded more cautiously with a bit less premium and slightly more leverage. Worked out well so far. The premium capture is much higher in H2 than H1.
