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sam_mufasa_ t1_iy8aden wrote

You're doing good just chill with 0dte and wild options.

219

awesomedan24 OP t1_iy8brq8 wrote

Thanks, haven't actually been using options, mainly quick all-in scalps and swings of 3X leveraged ETFs (nearly as bad as 0DTE options really)

I find this method to be more straightforward as I dont need to worry about IV, theta etc, plus I dont run any risk of worthless expiration.

These 3X etfs can be brutal though, and they are constantly reverse-splitting causing them to decay rapidly. Gotta get in and out quickly.

119

pragmojo t1_iy8tnkx wrote

Which ETF's reverse split? I have a little bit of SPXL & TQQQ and haven't noticed it

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awesomedan24 OP t1_iy8zz0r wrote

I think its any of the leveraged ones. Its hard to keep track of. I think most 3x ETFs are subject to around 10% decay per month.

9

adultswim_antifa t1_iy9btwy wrote

They don't perform 3x as well as stocks because they releverage every day and short term moves are mostly noise. So they are constantly buying tops and selling bottoms. If the market closes down today it will effectively sell to reduce leverage and that will slightly lower tomorrow's return if it moves back up. If the market closes up today, it will buy to increase leverage and that will slightly increase tomorrow's losses if it moves back down. That adds up over a year. The fees are no where near 10% per month.

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pragmojo t1_iy9e2d3 wrote

So does that muddy the results of back-testing? If you back-test TQQQ for example the returns look incredible over most periods.

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adultswim_antifa t1_iy9j9i4 wrote

The more frequently the releveraging, the less leverage is safe. If I could borrow at 6% and pay it back in 20 years with interest, there's no limit to the amount I would borrow. But if you relever every day and risk margin call, obviously being levered a million times means you're bankrupt if the market ever goes down slightly once. The 3x ETFs are much less leverage and have much lower fees than what most of you dumbasses are doing with options (that means much less dumb). Long term they're probably on the wrong side of the curve, meaning they will be much more volatile with returns that aren't that much better than the 2x ETFs. Everyone doing HFEA got destroyed this year. They'll probably recover though unlike the option yolo crowd.

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Moist_Lunch_5075 t1_iyans1b wrote

Exactly this. I use SPXU and SQQQ to hedge my SPY and QQQ positions.

The "10% decay per month" stuff u/awesomedan24 is referencing I've seen come from some fund managers and advisors and sites that reference "back of the envelope" type calculations that don't reflect the actual behavior of the funds but rather some "max leverage/worst case scenario over a long time" type situations.

I mean, yeah... if you hold SQQQ indefinitely, you're gonna lose money. If you hold it during a long term downtrend against a long position, though, you'll be fine.

When I started using my strategy earlier this year, what I found is that the formula for these ETFs is that they work basically on a 1.1x * leverage multiple over short periods of time in both directions, more or less. Basically, the effect of the leverage (with some very minor variance on a day to day basis because of the reset) amplifies the directional bias, and when you're in the correct direction the gains are slightly higher per dollar compared to non-leveraged, and accelerate in the same way on the wrong direction, at around 3.3x

I did long-term TQQQ holding calcs once and IIRC the return was around 2.6x rather than 3x (just buying 3 times the number of QQQ shares) and that matches the probability math around leverage you're talking about.

I also think the idea that these decay so much comes in part from the amplification of losses from movement, which isn't reset decay. Basically, at 3.3x amplification compared to the index, buying TQQQ on a decent decline day against the same capital for QQQ results in 3.3x the decline per dollar, which if you have 3x the capital in it (equal position) suddenly becomes... 10%.

The secret to hedging with this is that you use 1/3rd the capital for the hedged short ETF and keep in mind the excess capital impact when people are swinging longs on a bear run, like TQQQ. It's key to cut the capital exposure to something people are comfortable with in their positioning and it's easy for people to overallocate to leverage.

In reality, though, there isn't a 10% per day decay risk... most of the decline risk is in getting the directionality wrong and in overleveraging. Hell, 10% annual would be way high for decay on these.

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[deleted] t1_iy9gbl0 wrote

The expense ratios for most of them are about 1% (that's annnual)

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bayesian_slut t1_iyb02t6 wrote

SQQQ on a 15 year chart shows an all-time high of $524,736 (around July 2010) and an all-time low of $28.15 on December 27, 2021.

3x-leveraged, inverse ETFS decay like a mother fucker. TQQQ more or less trades proportional to QQQ, the overnight slippage is where some deviation from the benchmark may happen, but way less than the inverse funds

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XPlatform t1_iy9veus wrote

Leveraged ones. Scroll back to like a few years out and you'll usually see the downward slide from all the accumulated inefficiencies.

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Nucka574 t1_iybmyxe wrote

Those are both leveraged 3x qqq and spy etfs

1

lostmy2A t1_iyaem6w wrote

Another good thing about trading 3x ETFs is they have some liquidity after hours right? Unlike options you get stuck holding over night . That seems like a pretty good advantage by itself.

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awesomedan24 OP t1_iyaf0vf wrote

Yeah they can swing pretty dramatically in the pre & post market

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Nucka574 t1_iybn7e4 wrote

You don’t have to hold options over night actually… you can always exercise and cut after hours

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reddithoughtpolice1 t1_iyammzx wrote

why not futures? little to no decay there, can leverage as much or as little as needed.

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awesomedan24 OP t1_iyanhtz wrote

Laziness if nothing else, Fidelity doesnt offer futures, Ive been considering opening a small futes acct for a while.

2

aloc11 t1_iybqado wrote

Well done. This is what I do too. Easy to scalp a very sufficient return.

1

awesomedan24 OP t1_iy8altz wrote

Positions: Mainly quick scalps and swings of leveraged inverse (short) QQQ and VIX etfs (I think the tickers are not allowed here)

I've always struggled with risk management. I was up around 70% ytd in June then wiped it all out by holding onto my short positions into the summer rally.

Trying to be a bit better at managing risk this time with stop losses and taking profits quickly.

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rvm-2110 t1_iy8cj4r wrote

This works wonders. I trade options in India and covered my losses using 2 min trades. Set a target of 1% of all the cash I have. 2-3% on good days, -2% on bad days.

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NotDonaldTrumppp t1_iy8c6q6 wrote

For how long do u keep on holding them?

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awesomedan24 OP t1_iy8cmbd wrote

A few days at a time at maxiumum. Too easy to get killed otherwise. These are not designed to be held long term.

The drop you see in my account in June from the 145K high is when I held a leveraged VIX etf for several months, between the drop in volatility and the inherent decay of the leveraged etf, it decimated my account

16

NotDonaldTrumppp t1_iy8frpy wrote

Oh trust me. I am aware about the decay. My account blew up before because i was too stubborn to sell.

4

rOnce_Gaming t1_iy9mtvu wrote

I learned after losing money for good one year when I first started that for options if u see red - 10% just fold.

I just sell even if i think it will go back up or down once it's minus 10%. For green I just hold till I see a change. Has been working for me for few months now just that it's a slow upside now but at least no crazy loses. It's like 5 percent gains a month now when it used to be 300 gains then 350 lose the next month lol.

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awesomedan24 OP t1_iy9ow0i wrote

Good strategy. Paul Tudor Jones said in his Market Wizards interview that he will stop trading for the month if he ever reaches -10% across his account.

5% per month is amazing if you can sustain it. In just a few years youd be making more than most people make in many more years of sitting in SPY

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heklakatla t1_iya67p6 wrote

If /u/rOnce_Gaming could get 5% a month we'd all be funding them. That's nearly 80% a year... Hell, 2.5% a month nets you almost 35% after only 12-months. If you figure that out let us know!

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rOnce_Gaming t1_iyawbci wrote

I have made it for 5 months straight now. But it's a bear market and spy was really easy to read. I actually went way more than 5% because last month was 30% increase because of a lucky 0dte spy call I did.

Remember my username I'll post a year gain post next year July. I'm thinking bear market till next March then back to normal hopefully

But who knows I'll come back with a lost porn. But I doubt it with how much I play like a scared cat. I even play scared for gains as well hence the 5 percent. Most of my plays I could have made doubled if I held for like 3 more hrs but once I see at least 20% gain I just sell because I get sick inside thinking it might dip hard suddenly

2

heklakatla t1_iyb6akr wrote

Good luck with it and when you post the big gain next year let us know your methodology!

1

GhostNFog t1_iy9qgg7 wrote

Chart looks a lot someone who went from buying options to selling options.

5

kjjamal510 t1_iy8fow6 wrote

It appears to me you’re green , pre- greed.

15

awesomedan24 OP t1_iy8ii54 wrote

Never stopped being greedy, its screwed me many times! img

5

hollowtip1337 t1_iy8bqwl wrote

Yeesh ! Nice work . That's commitment.

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awesomedan24 OP t1_iy8bw57 wrote

Thanks, you'd be less proud of me if you saw a 2 year chart 💀

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hollowtip1337 t1_iy8c2je wrote

We've all got a two year chart ! Lol some are good some are bad . Make the next one better than the last !

2

spac420 t1_iy8q85s wrote

Sir! This is NOT ALLOWED! Ban!

congrats

8

JZervas t1_iy8yfi2 wrote

Nah, you’re just edging yourself. You’re still on your way to bring tucked.

8

L-Observateur t1_iy8iw66 wrote

I didn't know you could play Roller Coaster Tycoon in your brokerage app. Neato!

How do I add a pool of 50 whales to my losses though?

3

Eximietate t1_iy8qzp7 wrote

Rising channel due to break to the downside soon

3

AChaosG91 t1_iy97no8 wrote

Lock in some profit capt

2

awesomedan24 OP t1_iy9fp8g wrote

They say you can't beat the market but I've beaten SPY by about 50% ytd, and I'm just getting started img

2

bundlebundle t1_iyals67 wrote

*Slowly and unsurely unfucking yourself

2

blue_blurpie t1_iyawb3a wrote

Nice job. Did you set up direct deposit from your job?

2

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1

cheapdvds t1_iy8xh14 wrote

Looks like bear flag.

1

xMaxVelocityx t1_iy99jef wrote

Hopefully this is just 5% of your net worth you are doing this with, or you are just a complete regard quickly headed to the Wendys dumpster.

1

awesomedan24 OP t1_iy9aajy wrote

Its my entire account, I spent many a cold night behind that dumpster bringing companionship to passers by

3

Marcush214 t1_iy9dxsi wrote

Come on now 👏🏾👏🏾👏🏾👏🏾👏🏾👏🏾🔥🔥🔥🔥

1

subvert_all_systems t1_iy9fpor wrote

pretending that the last three months aren't DCA deposits

1

awesomedan24 OP t1_iy9gf0u wrote

I wish I had 30k of new savings to deposit. Only deposited a few thousand earlier this year when I rolled over a small 401k.

1

mth2 t1_iy9guoo wrote

This is awesome.

1

Blocker212 t1_iy9in76 wrote

Nice job! Similar situation stuff got in the way and I fucked myself early spring, now on the biggest climb of my life.

1

WolfOfPort t1_iyag6pk wrote

Fuck holding scalps is where money is in this market

1

horst-graben t1_iyagvfp wrote

You’re beating the S&P 500, 85% of hedge funds can’t do that. Buy MSI puts.

1

kingfencer t1_iyamu9q wrote

Rsi is high. Reversal coming soon

1

crankthehandle t1_iyazi9b wrote

dead cat bounce. Soon you will be done again.

1

wirringbjrd t1_iyb9tcv wrote

Man I wish when I had that level of money I started to unfuck myself instead of doubling the fuck down lol

1

awesomedan24 OP t1_iybazu8 wrote

I had a lot more last year 💀

Ive found "Shoulda coulda woulda" is the enemy of progress, the more time I spend lamenting losess, the less time I have to spend on turning things around

3

ToothSleuth86 t1_iybi5hg wrote

I saw “slowly but surely” and thought, Wow somebody that might actually know what they’re doing. Comment section did not disappoint

1

ActuallyTomCruise t1_iybn7ur wrote

What software/app is this?

1

awesomedan24 OP t1_iyd0n6p wrote

Fidelity

1

ladderinstairs t1_iybugvp wrote

It's always easier to lose it than make it back it seems

1

jyunk_ t1_iycr9j7 wrote

Nah man just keep fucking yourself that way you can post your loss porn here and provide me with entertainment.

1

sniperhare t1_iyctjvl wrote

How are so many people on here so rich?

1

awesomedan24 OP t1_iyd7kfn wrote

Inheritance in my case, havent pissed it all away yet

1