My 2024 options trading notes reflect a year of limited success with various options trading strategies: credit spreads, covered calls, and poor man’s covered calls.
| Strategy | No. of Trades | Income |
|---|---|---|
| LEAP Calls | 5 | $2,803.84 |
| Credit Spreads | 52 | $8,509.00 |
| Covered Calls | 34 | $1,820.00 |
| Poor Man’s Covered Calls | 7 | $1,664.00 |
| Sold Puts | 6 | $1,204.31 |
Credit Spreads and Covered Calls with SPY
I sold 15 put spread contracts on SPY from Jun to Dec 2024 and collected $854.11 in premiums. My trading plan:
- Look for a bullish trend in the weekly and monthly chart.
- Select a $5 spread at a strike price with 80% profit probability
- Select 1 week expiry
- Exit: Hold till expiration
The strategy went quite well in June. So, I added stocks such as NVDA, TSLA, AMZN, PYPL, and DE when they present the same conditions.
I have to stop the credit spread strategy in August when I was assigned and my capital dried up.
It was my bad. I saw a pullback coming but instead of sitting it out, I shortened the expiry dates, thinking this will limit my exposure. I was wrong. When the pullback came, it was swift and sharp. Fortunately, I could close the buy puts for a profit and reduced my cost basis.
With the assigned shares, I sold 8 covered calls from Sep to Dec 2024 and collected $1,098.70.
In total, I collected about $7,000 in option premiums from SPY.
Reflection: The income from spreads took time to accumulate and could be wiped out by one losing trade. Having capital ready for assignment was crucial. The August scare taught me that conservative expiries and rolling spreads are safer than chasing quick wins.
Covered Call Strategy (Individual Stocks)
Beyond SPY, I sold 27 covered calls across NVDA, TSLA, AMZN, PYPL and DE, collecting $1,820 in option premiums.
Some of the stocks were puts assigned to me a few years ago. Some strike prices were below my purchase prices, meaning assignment would lock in losses. I used this deliberately as a way to enforce discipline. If I couldn’t cut losses myself, assignment would do it for me. This strategy became a training ground for risk management.
Poor Man’s Covered Calls (PMCC) on GOOGL
In August 2024, with GOOGL trading around $165 (vs Adam Khoo’s fair value estimate of $237.67 (YouTube.com). If he is correct, Google’s share price should rise in the near future. This makes it a good candidate for a poor man’s covered call strategy. My plan is as follows:
Entry rules
- Buy call (BC): out of the money call for more than 365 days with implied volatility less than 30%
- Sell call (SC): +2 strike for less than 30 days
Exit rules
- If stock price stays below strike price on expiry date, roll the call
- If stock price goes above strike price before expiry date, roll the call as soon as possible for a credit.
- If call is exercised, close the BC, buy the shares at market price to fulfil the SC obligation.
- With 90 days left in the contract (12 September 2025), close both contracts.
Reflection: I executed my plan on 27 August 2024. I bought 2 LEAP calls and sold 6 PMCC. I collected a total of $1,664.00 in option premiums. PMCCs gave me flexibility but highlighted the importance of strike selection. Rolling calls for credit became a key tactic.
Looking Ahead to 2025
I realized I needed to build on my existing trading knowledge. I found OptionswithDavis.com and learnt to select longer DTE, structured exits, and strike analysis based on intrinsic/extrinsic values. My goal is to refine credit spreads and LEAP strategies for consistent, scalable income. I’ve also learnt to roll my credit spreads.
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