[Conclusion] 1 year of Selling Weekly "lottos" - Metrics Summary

TLDR: For the past year I experimented with a "time in the market" style selling out of the money weeklies consistently. I made $72,000 using an average of $95,000 per week in a year. But i had $250,000 set aside for this strategy so its really like a 29% yield.

I wasn't able to display how some stocks that were no longer used for weeklies turned out after retraces so this doesn't show the full picture for the portfolio, but the income is accurate.

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The past year was mostly bullish, but there were neutral and bearish weeks and months.

Unfortunately we never really got a full on bear, like 2022 type bear, so thats inconclusive. But I'm pretty sure all investing will suck in that type of down market unless you buy puts, short, or go all cash. But buying puts, shorting, or staying cash sucks in anything except a bear market, so its a tough balance.

I went more for the "time in the market" approach rather than waiting for dips. Typically I'll just sell something on a friday that expires the next friday. If an opportunity did present itself on thursdays or mondays I would try to time the market, but that was less often.

Mostly I was putting a lot of pressure on myself to have something open every week, and I don't think the time in the market approach is ideal for this. Mostly because the losses hit harder than the gains, so if you have some sort of intuition or innate ability, and good patience to time the dips, I think that will lead to more favorable outcomes.

Lastly, some people might disagree with my use of the term "lottos". I was trying to make reasonable salary type income so I wasn't going as far out of the money as some would consider real lottos. But I think anything otm has a low chance of being hit so its still favorable for the seller.

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Totals

For the full year I made a little bit over $72,000. In the first half, which was completely bull market, I made $39,000 using an average of $150,000 collateral per week.

The second half was actually neutral bearish up until the last 2 months, I was on pace to get even worse yield than the first half. But then the market reversed and I jumped into a stock that was going parabolic. Almost 90% of my second half income was made in the last 8 weeks.

I used a lot more of my available collateral in the first half, with 4 of the weeks using more than $200,000. But in the second half I chilled out and used an average of less than 25% of my total available funds.

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Averages

The first half I made more money, but in the second half I had a much higher yield. But again its mostly because of MU pumping the last 2 months than got me there so I believe the second half results are skewed and unrealistic.

Kind of same thing as the totals, the second half had a much higher estimated annual percentage yield, while the first half had a higher annualized dollar amount.

Not including loss weeks, there were 19 weeks where I made less than 1% yield. I also made more than 2% yield for 13 weeks (11 of those weeks were covered calls getting assigned).

9 weeks I did go down in total account value from shares going lower and exceeding the premium received from covered calls, and out of those there were 4 weeks I accounted as lost money from cash secured puts getting assigned lower than my breakeven.

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Fun Metrics

These are all stats I made up and aren't widely used industry standards. They are just fun for me to look at.

ProfitsFromProfits: This is just taking the total income and multiplying it by my average yield. Right now I can possibly make a little more than $1000 per week using only the profits I have already made. Although it might seem unrealistic, I think having 52 data points makes it more feasible.

SalaryFromProfits: Multiplying profitsfromprofits by 52 weeks it shows I can expect to make almost $55,000 in a year just by continuing with only the profits I've already made. Even getting half of this by reducing risk and going further otm with stable index funds would be really good for me.

DollarsPerHour: Assuming a 40 hour "work week" this is how much I would be making hourly if this was a normal job. This one is important to me because its the only metric that is weighed against a flat amount of time. I think making $35 per hour is pretty respectable for a filthy lotto seller.

WeeksUntil2x: This shows how many more weeks it will take for my total income to equal my average risk. At that point I would consider it a "house money" account. At my current rate I should get there in 4-5 months.

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Ratios and Assignments

For the full year I had 19 out of 108 unique options get assigned. 14 of 47 calls, and only 5 out of 61 puts.

Getting almost 1/3rd of my calls assigned is probably the most revealing statistic. Its very clear this whole year was a bull market from that alone, and a big chunk of my profits came from selling shares at a way higher price than I bought them just a week before.

I usually sold calls around 10-20% out of the money so getting that many calls assigned within 5-7 days is pretty wild in my opinion. I was expecting the assignment rate for calls to be similar to the puts.

The first half my call put ratio was pretty even, but in the second half I sold way more puts, mainly because I didn't want to buy shares outright as often.

I also only allowed 1 contract to expire worthless this whole time. I think its better to buy to close and have the ability to use that collateral for the next week immediately rather than having to wait over the weekend.  I also think its not worth holding an option thats already down 80-95% for a tiny bit more gain, when you can go to the next one and get more premium.

(PS that one contract I let expire worthless was a covered call as the put leg of a covered strangle was getting assigned)

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Flaws

There are some issues with my reporting that I'll be fixing with my next series. The main one is I didn't have a good system to show whats going on with my shares if they aren't being used for weeklies.

For example the 400 TTWO shares that I bought for the purpose of selling weeklies on all the way back in January just started to recover, but I've had to resort to selling 3 month covered calls on them since then.

I tried to show a "roster" in previous posts but it really wasn't a good way to display the shares and their status. So I'll be trying for a total portfolio type of update which shows the full picture rather than just the income gained from selling options.

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Retraces suck

I'm talking about big retraces, like 20-30% or more. Corrections are really bad for this strategy because you are only getting pieces on the way up, but you take the full hit on the way down. So if you are continuously buying higher your cost average continues going up. Then one big downturn will take all your little gains, and if it doesn't bounce then you are stuck.

I had many stocks that retraced from their highs and never came back. NFLX, HOOD, META, RDDT, and IBIT were a few of my stocks I was using for weeklies that retraced and stayed down. I still had a positive return on them, but most of my profits evaporated before I closed those positions.

The TTWO was my worst retrace. At one point I was up $60,000 from trading and writing options, and when it went from 260 to 190 in February I lost that entire gain and was even negative for a few days. 9 months of consistent gains just evaporated in 2-3 weeks, absolutely brutal. Thats why I took a 4 week break in the second half where I didn't trade at all. I'm back to up $30,000 profits on it now after it recovered back to 240 recently.

More of my picks corrected down from their peaks than my stocks that stayed high or continued appreciating, and in the end my weekly lotto selling mostly just saved my ass and I didn't even beat SPY. I'll blame my bad picks and not the strategy itself.

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Closing Statements

Weeklies ended up being better than I expected so I will continue with just the total income I made, but I'll take the pressure off by trying to time the dips better instead of always having a contract open.

I'll also just continue this with mostly index funds instead of trying to find individual stocks that may or may not beat QQQ or SPY. To me its not worth it trying to find stocks that can go up 200% or down 50% when the total market funds are doing so well. I have mostly individual stocks right now and am slowly transitioning to a goal of mostly index funds.

Let me know if you have any questions and I'll try to answer them the best I can.

Thats it for me. Thanks for reading and good luck in your writing derivative contract adventures.

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Disclaimers

I'm really sorry but I have to add these in here. These apply to all of my weekly lotto posts.

1. All my positions are covered with cash and shares. I don't use margin.

1. I am mostly ok with buying and selling the shares if assigned. Sometimes it hurts my feelings for like 5 minutes though.

1. This is a small portion of my account experimenting with weeklies.

1. I don't have a degree in finance or work in the investment field. Just a normal dude that learned about this sharing my choices and results.

1. And I know its unpopular to say this here, but I don't consider this free money. All investing carries the risk of losses which is why we get paid such a high premium.