The Backtesters
The #1 Options Trading Community for Backtesters
The Following Results are
BEFORE we discovered Backtesting as our Edge
The purpose of looking at our 2019 and 2020 track record is to give context behind how and why we currently trade the way we do now. Becoming a trader is not all sunshine and roses. There is a learning curve, and many setbacks along the way!​
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2019
In 2019, we sold puts every Friday that expired the following week. Some favorite stocks were Z, AMD, SNAP, and ROKU. This felt like a magical period. In addition to my high paying, demanding W-2 job, I was earning an average of $500 per week from selling options. I was barely paying attention to my trades yet still earning a substantial side income. 2019 was an exceptionally great year for the stock market with low levels of volatility, yet I believed I found the holy grail of investing, just sell options! 2019 resulted in overconfident mistakes that played out both in early 2020 and in 2021.
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Notice* Capital and BP are the same numbers. I was not using any leverage at this time.
ROI - based on amount of capital that was used in the account in that given month.
Total ROI a the cumulative return of each month. I use this number because the capital I deployed for this strategy varied significantly over the course of that year.
2020
This was the year I decided to become a full time trader. I thought if I could achieve so much trading success independently, then signing up for training would surely take my trading success to new heights. I signed up for countless services, each one ultimately over promising and underdelivering. One of those services charged $3,000 for a strategy that was simply bogus. A year later they charged me again, and I succeeded in issuing a chargeback through my credit card company. Another service charged $10,000 for access to a dozen 'Elite Traders' each with 2 or 3 of their own strategies. Within a year, this service ended up getting sued by the FTC for $130+ Million for misleading advertising. Their founders were living off subscription revenue while suffering large consistent losses in their personal trading accounts.
March 2020
This was the COVID crash. Up until this point, I was successfully selling weekly options. If I got assigned, I sold calls. I had no stop losses, and no plan for when the market cratered. Why should I? Up until this point, selling cash secured puts and covered calls was the holy grail. I only knew profits.
March and April 2020
During this time period, I discovered 0 DTE trading. During the COVID crash, I was able to earn 5-10% per SPX expiration day due to extreme levels of volatility. I was able to turn $30k into $60k in less than two months, only to give $25k of profits back swiftly as my luck came to an end. These results are not included in the below track record. I was happy enough to learn there were new ways to profit during high volatility.
July 2020
This was the month I officially left my full time job. I re-evaluated my options strategy. Instead of selling options expiring in 1 week, I started selling options that expired in 3-4 weeks. I felt this allowed me to collect more premium, so I could reap more benefit from a strong rally, but also I was able to set stop losses for the first time with a reasonable risk to reward.
July - December 2020
As you can see, I was living life on easy street, selling options on rinse and repeat, with a nice stable income averaging $4800/mo. I thought for sure I had made it.
What could go wrong?
Now I have Stop Losses!
BP Used - Notice in some months this is much greater than the actual cash I had available. As I was seeing success, I began moving more towards selling naked options.
Leverage - this tells you exactly what multiple of my account I was simulating by selling naked options
ROI - this is Return on Investment, counting my capital as the investment
Total ROI - I added the ROI column together due to various amounts of capital and buying power used
Total Capital - Average Capital used per month
Total BP Used - average Buying Power Used per month
2021 Early Carnage Led to Epiphany
Read Full Story Below.
