The Option Writer

99% boredom vs 1% mega stress

📅 April 21, 2023 edition

Why this newsletter?

As many, I have been discovering the world of options in crypto since last year. After degening and gambling with some option buying, I found out through @vincesector youtube channel that I can also sell options, meaning I can be the counterpart to gamblers 🎰🎲 and degens. This is the dream🔥! There aren’t many opportunities in gambling and investing where we can play as the house.

Since then, I have been messing with options writing, always following this chart:

I have an understanding of the concept and how to play it, but by no means am I an expert. I keep fine tuning🔧 it every epoch I play.

What I also found in my daily “crypto live” is that there is an unfamiliarity and curiosity with the concept of options, particularly the Option selling business.

This was the road that led me here: I decided to share this journey and publish every week my plan for the next epoch, my consolidate results and the findings and evolution in navigating the above line.

I hope this most boring (and profitable) subject catches your attention and that I can contribute in some way to help you navigate the line 😊

😱The 1% Mega Stress

One thing I am (was?) experimenting is writing Options to the subsequent Epoch, with the intention of capturing better premiums. Of course that with the recent ETH Pump (you crazy degens!!), my $2100 call sells for the 21st were underwater for some time and managing it was both a challenge and a learning experience:

• The difference in profit from selling 2 weekly epochs vs 1 sell for 2 weeks is not enough to justify the risk and uncertainty.

  • Example: selling a $2100 call for the 28th pays around $10, vs $24 for the week after. In my opinion the extra 10% in premium does not “pay” for the Delta risk, so I would rather sell for $10 this week and for another $10 the next week for the strike that makes sense at the time, and limit my risk and management to a single week.

• The decision to close the losing position is also a complicated one. For this one I established a 4H $2150 closing on ETH as my trigger, and that would be approximately a 8% to 12% loss. This is unacceptable, so I need to do better in the future:

  1. Writing only for the current Epoch (as explained above)

  2. Have a closing plan with a smaller loss (this is “navigating the line” 🤓)

📋April 28 Epoch plan

After the big pumps from last weeks it seems ETH is cooling off a bit. As I always look for way out of the money options my radar this week is for:

• $2150 CALL, Premium ~$6 (11.7% above)

• $2100 CALL, Premium ~$10 (9% above)

• $1750 PUT, Premium ~$10 (9% bellow)

• $1700 PUT, Premium ~$6 (11.7% bellow)

I will save some capital for the usual weekend shenanigans (got to love crypto bros weekend fun! 🙈). This way I don’t concentrate all my risk before a potential relevant move, and also give myself the opportunity of some juicier premiums. If things don’t change much, I am happy to add to the positions I have with a lower premium. The idea is to mitigate some risk by diversifying my entries, even if I have to sacrifice some premium for that.

📈📉My results

Average Yield %: 1.83%

Projected APY %: 156%

🐥Be sure to follow me on Twitter for more random thoughts on Options and other market topics

☕Coffee donations are accepted at 0xC13d722855f41CE5F82FD1a2B08eB3819819BCFF on any network/token

Nothing in this newsletter is financial advice. I just share my thoughts and personal experiences on Options and the markets in general