The Option Writer

99% boredom vs 1% mega stress

📅 May 19, 2023 edition

🙈🙉🙊Bias Management

One of the main issues I face in my 📈trading business is my inability to quickly adjust my bias to reality. I tend to be🐢 slow in adapting my views, probably due to my irrational "need to be right." Only after losing some trades does my brain accept what the chart had already communicated: My bias is no longer accurate.

I firmly believe that successful trading requires a constant 🏄‍♂️fluidity in our beliefs because the markets are fluid and dynamic.

I have found that I am much more capable of managing my bias in option selling. This is mainly due to the nature of the business, which is more prolonged in ⌛time and deals with a wider range of prices. Additionally, since I started looking for both call sells and put sells on the same epoch to spread risk, it doesn't make sense to have a bias because I want to sell strikes above and below the current price action. Here, I try to play with the price action itself by searching for call sells on significant moves up and for put sells on the inverse.

In conclusion, 🤯emotions can be easily removed from the option writing business. The characteristics of the process, combined with a pre-determined objective of spreading entries both ways, naturally result in a more 🧠analytic and pragmatic methodology. This leaves little room for bias to interfere. My goal is to stay away from the action and assume there will be no unexpected price action moves. If exceptions do present themselves, I will treat them as such and aim for the deviation in my P&L to be as meaningful as possible. Ultimately, the goal is to maintain the😴 boredom that I desire in option selling.

🥳If only I could be this objective and consistent in my trading business...

📋May 19 Epoch review

This was a strange week: I engaged with about 50% of my capital on Friday, and I was waiting for the usual scam pump on the weekend to spread my positions. The pump never came, or it was so weak that in the end it was meaningless, so I ended up with a smaller position this week. No harm done: money was made (0.9%), and risk was contained, 💯 according to plan.

No major risks during the week. I was ready to exit my call if PA challenged the calls, but moves are so weak that the boredom prevailed (see how I have a bias here?😅)

My positions for the week:

• $1950 CALL

• $1650 PUT

• $1600 PUT

📋May 26 Epoch plan

Nothing changes here: Still looking for calls and puts WAY out of the money. Since I had capital available, I started to build positions on Thursday:

• $2050 CALL

• $2000 CALL

46% of capital is already deployed, and I am waiting for signals and opportunities to spread my risk on Friday and the weekend, maybe a bit more 👊aggressively than last week, in order to deploy all or most of the capital. Let’s see what papa 🗣️JP gives us when he talks later! My general bias is still bearish, and I favor calls vs puts, because the markets tend to move more decisively to the downside.

📈📉My results

Average Yield %: 1.83%

Projected APY %: 156%

Growth %: 18.12%

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