With most of my inventory going ITM this week, several Vertical Spreads are down the Rabbit Hole. Is it even possible to think I can save them? Can I slay the Market Jabberwocky? It’s time to think of impossible things. It’s time to go on defense by rolling Vertical Spreads.
I try to believe in as many as six impossible things before breakfast.
– Alice Kingsleigh (Movie: Alice in Wonderland (2010))
Count them, Alice.
One, there are drinks that make you shrink.
Two, there are foods that make you grow.
Three, animals can talk.
Four, cats can disappear.
Five, there is a place called Underland.
Six, I can slay the Jabberwocky.
Slaying the Market’s Jabberwocky
This week felt like Alice falling down the Rabbit Hole. With the markets falling fast around me, it is hard to get a grasp on any market reality. So I sit here wondering if I can slay this Jabberwocky.
Therefore, this week will be spent playing defense. I hope to roll a couple of my high-risk Vertical Credit Spreads to safer territory while still making a profit. This week’s commentary is to document my action.

Commentary Contents
- What’s At Risk
- My Rolling Plan For This Week
- This Week’s Rolled Spreads
- SPY 425p/395p (expiring 1/28/22)
- QQQ 365p/345p (expiring 02/04/22)
- End of Week Results
Monday’s market mania had the DOW fall over 1,000 points before being slung back to end the day positive. The whipsaw action on Monday made my head swim. And Tuesday’s markets (today as I write this) began another sharp decline. The energy of this market correction seems to be a defensive posture readying itself for bad news from the Federal Reserve on Wednesday. So at this point, I have not yet seen a bottom.
As of Tuesday morning, seven of my eight open Vertical Spreads have their Short-Strike ITM. A couple seems hopeless, so now is the time to take up the Vorpal Sword and battle the Market’s Jabberwocky.
What’s At Risk
You used to be much more … “muchier.”
The Mad Hatter (Movie: Alice in Wonderland (2010))
You’ve lost your muchness.

My top four riskiest Spreads that lost their ‘muchness’:
- SPY, Short Put = 425, Long Put = 395, Expiration = 1/28/22 (4 days from now)
- Current SPY = 423.65
- Short Strike 0.3% into ITM, Long still OTM
- SPY has been falling fast. Too risky to hope for a bounce back by Friday.
- QQQ, Short Put = 365, Long Put = 345, Expiration = 2/4/22 (10 days from now)
- Current QQQ = 342.47
- Short Strike 6.3% into ITM, Long 0.7% into ITM
- This spread is deep ITM. With a week and a half until expiration, it does not look good.
- QQQ, Short Put = 368, Long Put = 348, Expiration = 2/18/22 (24 days from now)
- Current QQQ = 342.47
- Short Strike 7.2% into ITM, Long 1.4% into ITM
- This spread is deep ITM and primed for a total loss if the markets don’t start on a V-shape bounce back soon. Even being nearly 4 weeks out, I have concerns. Will likely wait until next week to address.
- QQQ, Short Put = 360, Long Put = 340, Expiration = 2/18/22 (24 days from now)
- Current QQQ = 339.68 (as of Friday)
- Short Strike 6.0% into ITM, Long 1.0% into ITM
- This spread is deep ITM and primed for a total loss if the markets don’t start on a V-shape bounce back soon. Even being nearly 3 weeks out, I have concerns. Will likely wait until next week to address.
My Rolling Plan For This Week

A Pinch of worm fat,
White Queen (Movie: Alice in Wonderland (2010))
urine of the horsefly…
oh, buttered fingers!
With so many of my Short Options in ITM, I feel the likelihood of some being assigned is high.
Chances of being assigned:
- If I allow my Short-Strike to expires this Friday in ITM, then being assigned is absolute
- If my Short-Strike in ITM is just days from expiration1,2, assignment is likely
- If my Short-Strike is deep ITM, assignment is likely
- If any Short-Strike is ITM, assignment is possible
1 Note: If I wait too long to enter a rolling order, there might not be any takers. So I need to make the rolling decision at least by Monday or Tuesday before expiration Friday.
2 Note: American options can be exercised any time up to and including the expiration date. However, European options can only be exercised on the date of expiration.
So to help improve my lottery chances of not being assigned, I will roll a couple of my highest at-risk Spreads using the following criteria:
- If Short-Strike slightly ITM, roll two or more weeks out. If Deep ITM roll out as far as I can.
- Short-Strikes of newly rolled Spreads needs to be closer to OTM (improving Prob-OTM).
- Extend Strike-Width (roll Long Strike farther out). Even though this will exceed max-risk for the Spread, it will also improve premiums collected/paid.
- Construct the rolled Spreads to have positive premiums (making the transaction profitable). If I have to pay to complete the roll, then make the debt less than the premiums I originally collected.
This Week’s Rolled Spreads
The Mad Hatter: Have I gone mad?
Movie: Alice in Wonderland (2010)
Alice: I’m afraid so. You’re entirely bonkers.
But I’ll tell you a secret.
All the best people are.

To review how to roll a Vertical Spread in ThinkorSwim, I need to revisit my post “How To Roll A Vertical Spread In ThinkorSwim.”
Details of my rolled Spreads are recorded below in “This Week’s Trade Activity.” But in summary, this is what I did:
Rolling SPY 425p/395p (expiring 1/28/22) to 420p/380p (expiring 2/11/22)
- Closed SPY 425p/395p paid $721
- Opened 420p/380p collected $829
- Moved expiration out 2 weeks
- Improved Short-Strike by 5 Strikes
- Collected additional $108 in premiums by Rolling this Vertical Spread.
- Increased Spread’s risk from $2,859 to $3,751
Short Strike is now barely OTM and has 17 days to improve.
Rolling QQQ 365p/345p (expiring 02/04/22) to 350p/310p (expiring 03/18/22)
- Closed QQQ 365p/345p paid $1,270
- Opened QQQ 350p/310p collected $1,310
- Moved expiration out 6 weeks
- Improved Short-Strike by 10 Strikes
- Collected additional $40 in premiums by Rolling this Vertical Spread.
- Increased Spread’s risk from $1,873 to $3,833
The rolled Short Strike is still ITM but has 52 days to recover.
End of Week Results
- Two high-risk Vertical Spreads were rolled. The new rolled Spreads are still at risk but slightly. I’m hoping the markets will regain its ‘muchness’ and make these safe.
- I increased my dollars at risk by $2,852. But this would be the same if I openned a new Vertical Spread during normal market times.
- I made $143.00 profit this week.
Off with their heads!
Queen of Hearts (Alice in Wonderland)
As of now (Friday morning 1/28), both At-Risk Spreads 4 and 5 (list above) are deeper in the hole. I will likely roll these early next week.
Other Posts from Options Trades By Damocles
This Week’s Market Sentiment
This Market Sentiment Section is typically completed by midday Monday morning. By the time this journal is published, it will be a week old.
(As of 01/24/2022)
This section reviews five indicators: VIX, Put/Call Ratio, S&P 500, Consumer Sentiment Index, and Ecopolitical events that could affect the market’s direction. I will use these indicators to help guide my trading decisions for this week.
Each of my five indicators will “vote” on a DEFCON (Damocles Options Trading Readiness Signal) level, exclusive to that indicator. Then, In the final sub-section, “My sentiment for this coming week” below, I’ll compile the votes into a DEFCON level for the week.
Ecopolitical Tree Shakers (ETS):
Ecopolitical (Sociopolitical-Economics) Tree Shakers (ETS) can be breaking news, political machinations, Federal Reserve musings, or even Twitter Trends. They are events that can abruptly change the dynamics of the current markets. U.S. political polarization’s impact on Wall Street cannot be glossed over.
ETS is like a lit fuse to a bomb. The fuse can be fast or slow, and the bomb can easily be a dud. But I need to watch this closely as an indicator. The ETS can significantly disrupt all the other indicators at the drop of a hat.
- Hello Market Correction
- Last week’s Tech stocks’ performance worst since 2020 March COVID-Crash
- Inflation still + rising interest rates = bad news
- Federal Reserve meeting this week
- Fourth-Quarter GDP will come out Thursday
- Personal Consumption Expenditure (PCE) Price Index out on Friday
- Omicron is waning but that does not seem to counter the hystaria hype
- Government funding debate to reignite soon
Say hello to Market Corrections!
The small-caps ETF IWM tanked 19%, and the tech-heavy QQQ slumped 13% from their November 52-week high. Both of my go-to underlyings are deep into correction territory. The S&P 500 fell 8.3%, and the DOW is now down 6.9% since the start of the year.
Inflation is probably the senior cause for the bottom being pulled from under most of these ETFs. A broken supply chain (demand > supplies) fuels inflation, and the supply chain is broken because of the dramatic fall in the labor force. The labor force is shrinking because the over-abundance of free stimulus money allows people to say home.
(Note: I always felt that the traditional home was broken due to the past Social Engineers pushing more and more people into the labor force. First, it was to buy more stuff and boost the flagging economy. But after 40 years of growing the Labor Force, the force of supply and demand dropped salaries across the board (more people to do the same job = pay less per job). So now we need everyone to work outside the home just to make ends meet.)
A heavy set of ETSs is coming out this week: the Federal Reserve meeting this Tuesday and Wednesday, fourth-quarter 2021’s GDP on Thursday, and the PCE on Friday.
I assume that January’s market correction was caused by mega-investment firms (those with the $100-million economic research departments) trying to get out in front of what they expect to be bad news this week. So this week’s stocks volatility will depend upon just how well those research teams did their jobs.
Expect a reigniting of the bitter Government Funding debates soon. Congress’s stop-gap bill passed in December expires on February 18. And with all of Congress working so well together (NOT!) I will presume another stop-gap Bill.
Expect the fearmongering to ratchet up early in 2022 as the mid-term elections campaigning start to heat up. With the “Right to Vote” act defeated, the media-mantra will now be “we can not trust the 2022 election – except if Democrats win.”
As of the end of last week, both the tech-heavy Nasdaq and the small-caps Russell are deep in correction territory. The DOW and S&P are not too far behind.
Systemic economic pressures are going to keep a lid on the Stock Markets. I will vote for a DEFCON 3
ETS votes DEFCON 3
VIX: Broad Market Volatility
The VIX is an emotion-gauge for the general investing population. It is thought to be driven by the Marketeers’ current level of greed or fear. As one-month forward-looking volatility, it is not designed to tell us which direction the market will move but rather how fast it can get there.
A VIX of 15% is assumed to be a market at rest. Since the intrinsic nature of the Stock Market is to move up, a VIX close to 15% or below will correspond with the market’s innate tendency to rise.
The 1-month trajectory of the VIX Regression Channel took a high left turn bearish.
The last time the VIX was this high was during the Debt-Ceiling/Gov-Funding debates back at the beginning of December. The Debt-Ceiling issue has been resolved until early next year, but funding the Government is about to kick in.
Being blind to all other indicators, I will vote for a DEFCON level 3
VIX votes a DEFCON 3
Put/Call Ratio:
Put Options are frequently used as protection against existing investments falling. When the ratio between Put Options bought versus Call Options bought is above 1, this is an indicator that the Marketeers are buying insurance to what they may see as declining Markets (or a pending Market collapse). Conversely, when the Put/Call Ratio falls below 1, there is a general sense that the broader Markets will increase, and more investors are buying more than selling.
In the past 10 days, the S&P 500 Put/Call Ratio started a steep incline towards the dreaded 1.0 line. The 9-Day SMA and the 50-Day SMA are both above .5 and climbing. Last week’s value ended at a significant jump to .89. The last time the ratio was this high was 4/2/2020 (COVID-Crash).
The ratio is now in the Nervous range and fast approaching Trouble.
Being blind to all other indicators, I’ll vote a DEFCON 3
Put/Call Ratio votes a DEFCON 4
Consumer Sentiment Index (CSI):
A low CSI index is a general dissatisfaction with our current management of U.S. economic policies. This dissatisfaction will imply that something has to change. A high satisfaction rating suggests approval of the current policy management and implies market stability. Surveys of Consumers (umich.edu)
The CSI data ticked downward as January started. This sentiment is approaching the worst in a decade. Compare this to the average of 82.9 in 2021.
Inflation is probably the biggest drag to the index, as the Omicron news generates a collective shrug.
Being blind to all other indicators and just looking at this week’s CSI, I feel we should be extremely cautious.
CSI votes a DEFCON 3
Market Indexes:
DOW (DJX) = 34,265 – down 4.6% from 35,912 last week. (4 weeks deviation: 640 up from 435 last week)
S&P 500 (SPX) = 4,398- down 5.7% from 4,663 last week. (4 weeks deviation: 108.83 hugely up from 64.97 last week)
The S&P 500 is a stock market index that tracks the 500 largest companies in the U.S. This index represents about 80% of all the capitalization for the country. The S&P is widely considered the best indicator of how all the U.S. markets are performing.
Market Thrashing
4 Weeks Thrashing of DJX = +/- 640 points or 1.9% of the market’s volume is up from 1.2% last week.
4 Weeks Thrashing of SPX = +/- 108.83 points or 2.5% of the market’s volume is hugely up from 1.4% last week.
(Market Thrashing above 1.0% might indicate indecision from the Marketeers.)
The S&P 500 had its worst week since the COVID-Crash of 2020.
The 4-week Market Thrashing skyrocket. This higher Thrashing is a signal of uncertainty by the Marketeers, and the Marketeers hate uncertainty.
- The 4-month trend remains bullish
- The 4-week trajectory on steep decline
- The 9-Day SMA and the 50-Day SMA are running with the bears
- S&P 500 down 8.3% since start of year – approaching correction
- High Thrashing suggests the decline will continue
Being blind to all other indicators, I’ll go with a DEFCON 3
Market Index votes a DEFCON 3
My sentiment for this coming week:
Of the five indicators:
- The ETS is showing concerning content – DEFCON 3
- The VIX raising sharply – DEFCON 3
- The P/C Ratio shows nervousness – DEFCON 3
- The CSI shows a consumer base not excited about our economic future – DEFCON 3
- The QQQ and IWM in correction territory, DIA and SPY fast approaching – DEFCON 3
The bears have firm claws in the Marketeers.
I’m hoping that whatever bad news comes from this week’s economic reports has already taken their tow in market value. I’m looking for the market bottom this week (fingers crossed).
Trading Readiness Level for this week
This week, I will focus on:
With this week’s DEFCON 3, I’m going defense to salvage my current ITM positions.
- Roll the most at-risk opened Vertical Spreads.
- Rolled Spreads to be pushed towards OTM if possible.
- Be OK with paying a premium as long as the debit is not more than originally collected.
- Be OK with a widening the strike width, as long as the additional risk does not exceed the week’s max
- Spread term of 8-weeks or less.
Profit and Loss Statement
(As of 01/28/2022)
Balance Sheet
Year 2022 | Month Jan | Week #4 | |
Beginning Account Balance | $28,000.00 | $28,000.00 | $28,582.86 |
Deposits (Div. & Int.) | $0.00 | $0.00 | $0.00 |
Withdraws (paycheck1) | -$525.00 | -$525.00 | -$525.00 |
Premiums on Open | $2,745.00 | $2,745.00 | $2,139.00 |
Premiums on Close | -2,007.00 | -$2,007.00 | -$1,991.00 |
Fees Paid (total) | -$11.25 | -$11.25 | -$4.11 |
Ending Account Balance | $28,201.75 | $28,201.75 | $28,201.75 |
Total Gain/Loss | $201.75 | $201.75 | $381.11 |
ROR | 0.7% | -1.3% | |
ROC | 0.7% |
Progress Graph
(Note: the negative weekly results for weeks 4 were when I withdrew $525 from the Trading Account for my paycheck.)
My Performance vs. SPY
Hypothetically, instead of depositing $28,000 in my Options Trading Account, could I have done better if I bought $28,000 of the ETF/SPY instead?
Options Trading Account | SPY (Fictional) | |
Initial Investment (As of Jan 4, 2021) | $28,000.00 (Cash) | $28,000.00 (58.9523 shares @ $474.96) |
Funds Added | $2,745.00 (Premiums) | 0.0 shares (Dividends Reinvested) |
Funds Removed | -$2,018.25 (Early Close & Fees) | $0 (Fractional Shares Sold) |
Ending Balance | $28,726.75 (Cash) | $25,274.04 (58.9523 shares * $428.72 CV) |
ROI | +2.6% | -9.7% |
Schedule for this Week
Goals for this week: (01/24/2022 – 01/28/2022) (Week #4)
- Document lessons learned or new thoughts
- Open one or two wide-strike spread
- Update Trading Log as trades occurs
Monday:
- Determine/update this week’s market sentiment section
- Calculate/record Put/Call Ratios for all stocks on the watch list
- Review/tweak Trend-Channels for all stocks in the watch list
- Set target expiration dates for all Options as follows:
- Bull Credit Spreads: Mar 18, 2022 (6-8 weeks)
Note: If there are no Options Chains published for the 8-week expiration, then use the next Options Chain down from 8-weeks (7-weeks, 6-weeks). Beyond 4-week expirations, only the monthly chains are available to trade.
- Bull Credit Spreads: Mar 18, 2022 (6-8 weeks)
- Look up Ex-Dividend dates for positions in/approaching ITM (MarketWatch/Calendar)
- Stage possible trades for all watch list stocks by 10:00 AM
- NO TRADING BEFORE 10 AM. (Let the Market find its direction after the weekend.)
- Watch one Webcast or take one online mini-course to be completed by Friday.
Tuesday – Thursday:
- Review how yesterday’s staged trades moved. Adjust premiums to take advantage of movements.
- Submit a couple of Spreads, but keep a close watch. If one is accepted, cancel the others (we want only one new active trade per day).
- Be mindful of Entry Rules.
Friday:
- Review the total technical dollars at risk for this week. If significantly below $500, then submit additional spreads if prudent.
- Update and post weekly journal (this blog) with any lessons learned or strategy changes.
This Week’s Trade Activity
(As of 01/28/2022)
Spread Count Summary:
Year 2022 | Month Jan | Week #4 | |
Vertical Bull Put Credit Spread | 7 | 7 | 2 |
Vertical Bear Call Credit Spread | 0 | 0 | 0 |
Vertical Bull Put Debit Spread | 0 | 0 | 0 |
Vertical Bull Call Debit Spread | 0 | 0 | 0 |
Margin Interest | 0 | 0 | 0 |
Total | 7 | 7 | 2 |
Current Dollars at Risk:
Year 2022 | Month Jan | Week #4 | |
Vertical Bull Put Credit Spread | $16,111. | $14,255. | $5,861. |
Vertical Bear Call Credit Spread | $0. | $0. | $0. |
Vertical Bull Put Debit Spread | $0. | $0. | $0. |
Vertical Bull Call Debit Spread | $0. | $0. | $0. |
Iron Condor | $0. | $0. | $0. |
Total Dollar Risk | $16,111. | $14,255. | $5,861. |
Max Risk Allowed | $28,000. | N/A | $3,500. |
Vertical Spreads Opened This Week
(01/24/2022 – 01/28/2022)
(Rolled) SPY:420p/380p – Open 01/24/22 – Expires 02/11/22 – Max Gain = $829.00 – Open Price = $423.65
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM=51.8%, Headroom-0.4%, Max Loss=$3,171, AROR=529.5%
Entry Rules for Vertical Bull Put Credit Spreads:
- Current maximum dollars at risk < $24,000? Yes ($15,294)
- Max dollar at risk this week < $3,500? Yes ($3,171)
- Max time to have any dollars at risk < 8 weeks (<56 days)? Yes (18 days)
- Long-term trend (four months) bullish? Yes (see chart)
- Short-term trajectory of the underlying bullish? No (see chart)
- 2-week Bullish & Thrashing < 1%: No (2-week = Bearish, Thrashing =3.5%)
- Put/Call Ratio < 1, (or falling if it is > 1)? No (1.6 upfrom 1.1)
- Current price above 9-Day SMA?: No (see chart)
- 9-Day SMA above 50-Day SMA?: No (see chart)
- Short-strike > 1 SD below the current price?
No(1SD=$392.96)
- Short-strikes Prob-OTM >= 85.0%? No (51.8%)
- Short-Strike price below the trend channel at expiration?: Yes (see chart)
- Strike Width minimum (>= 15)? Yes (40 strike width)
With 4 days left in the original spread, the Short-Strike fell ITM and the market on Monday was already 1,000 down. I did not see any avenue for this spread to end this week without being exercised. I Rolled the original Spread 2 weeks and 5 strikes closer to OTM. I’m hoping the SPY will start a rebound before this expires.
Note: Rolling this Spread for 2 weeks and 5 Strikes closer to OTM allowed me to collect a premium of $1.08 x 100 shares = $108 – fees. If this is the only transaction I complete this will, then this week will still be a winner.
(Rolled) QQQ:350p/310p – Open 01/25/22 – Expires 03/18/22 – Max Gain = $1,309 – Open Price = $358.30
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM=40.6%, Headroom2.1%, Max Loss=$2,690, AROR=341.6%
Entry Rules for Vertical Bull Put Credit Spreads:
- Current maximum dollars at risk < $24,000? Yes ($16,111)
- Max dollar at risk this week < $3,500? No ($5,861)
- Max time to have any dollars at risk < 8 weeks (<56 days)? Yes (52 days)
- Long-term trend (four months) bullish? Yes (see chart)
- Short-term trajectory of the underlying bullish? No (see chart)
- 2-week Bullish & Thrashing < 1%: No (2-week = Bearish, Thrashing =3.5%)
- Put/Call Ratio < 1, (or falling if it is > 1)? Yes (1.0 down from 2.0)
- Current price above 9-Day SMA?: No (see chart)
- 9-Day SMA above 50-Day SMA?: No (see chart)
- Short-strike > 1 SD below the current price?
No(1SD=$305.24)
- Short-strikes Prob-OTM >= 85.0%? No (40.6%)
- Short-Strike price below the trend channel at expiration?: Yes (see chart)
- Strike Width minimum (>= 15)? Yes (40 strike width)
Vertical Spreads Currently Cooking
(As of 01/28/2022)
My inventory of open Spreads has taken a beating the past four weeks. Three of my current positions have the Short Strike ITM already.
If the correction bottom can be hit this week, then I may still have a chance to get out with most of my skivvies intact.
SPY:410p/390p – Open 01/19/22 – Expires 03/04/22 – Max Gain = $115.00 – Open Price = $458.30
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM=86.5%, Headroom-10.7%, Max Loss=$1,885, AROR=50.2%
Now: Prob. OTM=72.3%, Headroom=-6.4%
DIA:330p/315p – Open 01/14/22 – Expires 02/25/22 – Max Gain = $95.00 – Open Price = $358.51
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM=84.3%, Headroom-8.0%, Max Loss=$1,405, AROR=58.1%
Now: Prob. OTM=66.4%, Headroom=-3.6%
SPY:430p/410p – Open 01/12/22 – Expires 02/25/22 – Max Gain = $110.00 – Open Price = $470.75
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM=85.8%, Headroom-8.7%, Max Loss=$1,890, AROR=47.8%
Now: Prob. OTM=55.9%, Headroom=-1.8%
SPY:431p/416p – Open 01/07/22 – Expires 02/18/22 – Max Gain = $172.00 – Open Price = $399.76
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM=83.0%, Headroom-8.0%, Max Loss=$1,386, AROR=69.2%
Now: Prob. OTM=55.6%, Headroom=-1.6%
QQQ:368p/348p – Open 01/03/22 – Expires 02/18/22 – Max Gain = $172.00 – Open Price = $399.76
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM=80.0%, Headroom-7.9%, Max Loss=$1,828, AROR=74.2%
Now: Prob. OTM=23.2%, Headroom=+4.6%
Short-Strike ITM by 4.4%. Long-Strike OTM with -1.0% headroom.
QQQ:360p/340p – Open 12/28/21 – Expires 02/18/22 – Max Gain = $144.00- Open Price = $402.27
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM=83.0%, Headroom-10.1%, Max Loss=$1,856, AROR=54.1%
Now: Prob. OTM=34.9%, Headroom=+2.4%
Short-Strike ITM by 2.3%. Long-Strike OTM with -3.3% headroom.
Short-Strike ITM by 3.8%. Long-Strike OTM with -1.9% headroom.
This Spread has 12 days to expiration. I will wait until Monday (1/24/22) and roll to March 4.
Vertical Spreads Closed This Week
(As of 01/28/2022)
QQQ:365p/345p – Open 12/27/21 – Expires 02/04/22 – Max Gain = $127.00- Open Price = $401.79
(Vertical Bull Put Credit Spread) (Rolled to 350p/310p Expiring 03/18/22)
At Open: Prob. OTM=84.1%, Headroom-9.1%, Max Loss=$1,873, AROR=63.0%
At Close: Prob. OTM=14.6%, Head Room=+6.3%, AROR= -756.6%
Cost to open: $1.27 premium collected * 100 shares = $127.00
Cost to close: $12.51 premium paid * 100 shares = $1,251.00
Net Profit= $127.00 to open – $1,251.00 to close – $2.00 fees = -$1,126.00
AROR= (-$1,126.00 / 29 days in play) *365 / $1,873= -756.6%
This Spread was closed a week early because both legs were deep ITM. The Short-Strike was 6.3% below current price and the markets were giving no signs of letting up.
Closing this Spread and opening the new Spread produced a gross Trading Account gain of $183.00 (-$1,126 + $1.309).
SPY:425p/395p – Open 12/15/21 – Expires 01/28/22 – Max Gain = $141.00 – Open Price = $470.18
(Vertical Bull Put Credit Spread) (Rolled to 420p/380p Expiring 02/11/22)At Open: Prob. OTM=86.2%, Headroom-9.6%, Max Loss=$2,859, AROR=40.6%
At Close: Prob. OTM=43%, Head Room=+3.0%, AROR= -185.8%
Cost to open: $1.41 premium collected * 100 shares = $141.00
Cost to close: $7.21 premium paid * 100 shares = $721.00
Net Profit= $141.00 to open – $721.00 to close – $2.00 fees = -$582.00
AROR= (-$582.00 / 40 days in play) *365 / $2,859 = -185.8%
I closed this Vertical Spread because of the high probability the Short-Strike would be assigned before the week was up. It was deep underwater at the start of the week, and with Monday’s rout of over 1,000 points, I gave it no chance of surviving. But little did I know that Monday’s trouncing would slingshot back up and by Wednesday, SPY was 433.38 (Short-Strike well OTM).
But I’m happily rolling this Spread. Closing this Spread and opening the new Spread produced a gross Trading Account gain of $247.00 (-$582 + $829).
Conclusion
Can selling options for income be considered a Home Business? Can I make money at home by selling Vertical Bull Put Credit Options Spreads? These are questions that I am trying to answer for myself.
Three years ago, I set out on a task to see if I could make a retirement income from home by trading Stock Options. I began with NO knowledge of Options mechanics and only $8,000 to risk. And because I learn best when I write things down, I have documented every step of the way (every bonehead mistake, process epiphanies, interconnecting events, externalities, and so on).
This blog is my Options Trading Journal. I will record my weekly Option Contracts buys and sells in hopes of gaining experience.
Experience is the ability to recognize that
– Damocles
I’m about to make the same mistake again.
Disclaimer
Even though I have tried to make it clear that this blog is my personal trading journal, it has been suggested by others that I, nevertheless, include a general disclaimer. So here goes…
“This blog and the information contained herein is not intended to be a source of advice or analysis concerning the material presented. The information and/or documents contained in the blog do not constitute investment advice.”

No comments! Be the first commenter?