My Ameritrade accounts were transferred to Charles Schwab on the weekend of Nov 3. And for the better part of this month, I’ve been picking up the pieces. I felt like Carl Fredricksen in a slow slog, trudging towards my new investment home. Towing my Schwab accounts over my shoulder as I seek Paradise Falls (a.k.a. Quicken).

Not So Quicken

My Ameritrade accounts were transferred to Charles Schwab on the weekend of Nov 3.  And for the better part of this month, I’ve been picking up the pieces.

Ameritrade to Schwab Accounts Transfers

After counting pennies and fractions of shares, the transfer of my TD Ameritrade accounts went smoothly over the Nov 3 weekend. My offline account audit (between Charles Schwab and my Quicken) showed a remarkable transfer.

However, I have not yet verified the cost basis of my holdings, as Quicken is not known for its accuracy in keeping the running tally over the years.

Schwab Thinkorswim

The login process is annoying.

Opening my implementation of Thinkorswim, now connecting to Schwab, takes an annoying 5+ minutes to get from the Login ID to the Password box.

While waiting for the next login step, I get a coffee refill, play with the cat, and peruse news sites on my computers.

Drawing Sets All Gone

Prior to entering any new Options contract, I always lay out a visual technical analysis in Thinkorswim’s charts tab. This helps me decide which of my Options options to entertain. But as I transitioned from Ameritrade to Schwab, none of my drawing sets made it over.

It took me way too long to realize that I spent three times the effort trying to figure out how to transfer my sets when I could have recreated them manually. So I sucked up my nerdy pride and started re-charting.

Schwab Quicken

I am a massive fan of Quicken! I have used it for over 25 years, and it does a great job of pulling all my financials from several different institutions into one easy-to-read ledger. Any new account that I open anywhere has to be Quicken-friendly. So far, luckily, I haven’t met one that wasn’t.

Online Setup for Quickens One-Step Updates

After confirming that my nickles and dimes did transfer to Schwab, it was time to set up Quicken.

Schwab transferred five accounts from Ameritrade. These need to be added to Quicken via the One-Step Update.

My first attempt to set up all five simultaneously was a disaster – placeholders galore!

Quicken would complain that some of my selected accounts could not be found at Schwab. Others that were ‘found’ were misdirected to my now-defunct Quicken/Ameritrade accounts.

Then, after muscling the accounts so they all downloaded correctly, I would do another Quicken update to confirm all was well – no such luck. The not-found on Schwab issue would mysteriously pop up. I would delete/recreate the not-found accounts in Quicken to fix the not-found issue, but that issue would just bounce around from one new Quicken/Schwab account to another.

Major headache!

I wound up restoring my last Quicken back up and started over several times.

I finally beat that beast by setting up one account at a time. Backing up after each account is added, closed, and then reopened Quicken. It was laborious, but dragon slew!

Schwab’s Cover Shorts on Monday.

I am not sure if this issue is because each broker labeled transactions differently, but many of the open Options transactions downloaded from Schwab (that were transferred from Ameritrade) could not be Quickenized.

Instead of properly classifying a Short transaction as a ShtSell, it just removed the Short shares and updated the accounts running cash balance. When the Cover Call options actually expired, and I needed to enter a CvtShrt to close the contract, Quicken complained that there was no Short Sell to close.

I needed to painstakingly correct several of these confused transactions in my first Quicken download.

Paradise Falls?

Did we make it, Ellie?

Some of the shortfalls with Quicken/Ameritrade had been psychologically dealt with and mentally compartmentalized years ago. But the Quicken downloads from Schwab over the first few weeks have jazzed me.

Quicken Cover Shorts From Ameritrade

A few of the major pains with downloading Options Transactions from Ameritrade were:

• Expired transactions for Options contracts would not be downloaded until the Tuesday after Expiration Friday.
• Expired Options transactions that do download were not of the correct transaction type. Transactions for closing a Short came down as an ADD, and for the Longs, a REMOVE. Excepting these would not close the contracts in Quicken.

Because of these two issues, I manually entered a Quicken CvtShrt and Sell transaction for all expired contracts over the weekend, then deleted the downloaded transactions on Tuesday.

Quicken Cover Shorts from Schwab

• A closing Options transaction is now downloaded for the Monday morning falling Expiration Friday – Yay.
• The closing transaction for a Short is now correctly labeled. The Quicken downloaded transaction now comes as CvtShrt, and accepting this downloaded transaction correctly removes the Short in Quicken – Yay.
• (I can’t vouch for a closed Long since I haven’t had a Vertical Bull Put Credit Spread expire yet.)

Adventure is out there!

Charles Muntz

Other Posts from Options Trades By Damocles

This Month’s Market Sentiment

This Market Sentiment Section is typically completed the first week of the month. By the time this journal is published, it will be mostly old news.

(As of Nov 2023)

Ecopolitical Influencers

Ecopolitical (Sociopolitical-Economics) Influencers (EPIs) 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.

EPIs are 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 EPIs can significantly disrupt all the other indicators at the drop of a tweet.

Yikes – Yawns – Yays

• Israel pushes through Gaza – Yikes
• Federal Fiscal Budget fight – Yikes
• Is Buffett ducking for cover? – Yikes
• Consumer Spending fell in Oct – Yikes

• Feds hold Interest Rate – Yawn
• Moody Cuts US Credit Rating – Yawn

• – Yay

Geopolitical

• Not heeding calls for a slowdown, Israeli troops have been marching to Gaza City. And as such, a surprising number of Palestinian sympathizers are disrupting governments around the world. If their mantras were “Free the hostages” instead of “Stop the genocide,” then the aggression would likely drop from a boil to a simmer. Israel’s existence in that part of the world is crucial. Without Israel’s forceful neutralizing influence, several ruthless Islamic factions would push and compete to turn the entire Middle East into a Caliphate. A Middle East free-for-all will disrupt economies in Europe, South/Central Asia, and North Africa.

• Berkshire Hathaway reported its first Quarterly loss in over a year. Speculation is the loss is due to its heavy allocation of AAPL, but there may be another reason. The investment firm is also sitting on $157B in cash. The holding firm’s cash store now represents about 40% of cash to assets. Are they moving to cash for a reason?

• Nov 17 is the deadline for Congress to pass and for Biden to sign the FY 2024 Appropriation bills before the current CR runs out and the Government stops paying bills. The Democrats will unanimously vote no to any bill just to stick their thumbs in the eye of the Republican leadership. Many of the revolutionary Republicans are willing to take the process to the precipice of the abyss. And the House has a new and untested Speaker. As of this writing, there are less than two weeks until that magic date, and I don’t feel confident that our politicians will come together. I suspect there will be a call of calamity as Nov 17 approaches. The Marketeers will be nervous, and the market will suffer – until the next CR is approved.

• Speaker Johnson’s gamble to avoid a Federal Government shutdown this Friday is another CR. Again, kicking this can (now two cans) down the road to delay setting a 2024 budget. The Democrats are happy to let the last Congress’s massive budget continue with its massive “Build Back Better” spending spree –  so the Dems are unified. The Republicans desperately want to stave the exploding deficit and are fighting amongst their slim-majority selves – are in disarray. I’ve been postponing opening new Spreads until the budget battles are over, but that may be a while.
  • Even the most recalcitrant Republican has lost their appetite to threaten a government shutdown over a few dollars less. So, I do expect an easy and clean CR will be past well before the Nov 17 deadline.

Socioeconomics 

• What should be a Yay, Powell announcing the hold on raising the Discount Rate will be muted by his still hawkish tone – that this may not be the end of the hikes. Powell needs to announce that inflation has topped and that a reduction in rates over 2024 may be the only thing that “might” forestall a recession.

• On the heels of Fitch lowering its US ratings to an AA+, Moody underscored its doubts about the US economy by lowering the US credit rating from stable to negative. Unsustainable debt, massive spending, and political gridlock are not stoking much confidence from global money watchers (which translates to us Marketeers).

• With CHRISTmas coming, it seems that the Feds have our economy just where they want it – flailing. But much of the pressure on the markets has lessened, and the current short rally may continue, but not as aggressively.

Ecopolitical Influencers: Cautious DEFCON = 4

This Month’s Guidance

For the long-term (one year out): The ominous events of last month have passed, and the trajectories of the Broader Markets appear Bullish. CHRISTmas-related retail sales are next month, but consumers appear willing to buy even with high inflation. I think the Short legs on my Vertical Bull Put Credit Spreads could rise for a few months before the election pressures them down. And maybe I could close early for a +16% AROR profit.

A Sept ’24 expiration will carry the election effect.

For the short term (Dec ’23): The past three weeks saw a near 10% recovery in the S&P 500. The VIX has hovered below 15% for most of the month leaving calculated premiums barely worth it. It seems the Marketeers are betting on a Santa Rally next month.

Profit and Loss Statements

(As of 12/01/23)

My Performance vs. SPY

Hypothetically, instead of depositing $20,000 in my Options Trading Account, could I have done better if I bought $20,000 of the ETF/SPY instead?

¹ Calculated separately by averaging each position’s individual ARORs (M2M AROR for all open assets + actual AROR for all closed positions).
² Unrealized Profit or Loss (M2M value + max gains of all open positions).
³ Actual dollars received.
⁴ Net unrealized appreciation on my portfolio.

This Month’s Trade Activity

(As of 12/01/2023)

Spread Count Summary:

Current Dollars at Risk:

Note: no new Spreads this week.

Options Buying Power:

Unallocated dollars available to open new Vertical Credit Spreads:

Vertical Spreads Opened This Month

(10/30/2023 – 12/01/2023)

This month, I opened my first Vertical Bull Put Credit Spread in two months. The primary reason is the Fed Budget Battle got an end-of-year reprieve (now next Jan and Feb), the Feds restrained to up Interest Rates, and inflation seemed to have ebbed. The 2024 election hysteria will undoubtedly rock this position, but I’m hoping the Prob-OTM will rise long before it starts to fall.

I wrote this during the last week of November. I was seriously considering opening a second Vertical Bull Put Credit Spread for ETF/SPY. All the indicators are positive, and premiums abound. But…

The last 30 days have seen an incredible rise of nearly 11 % for SPY (maybe a bit too incredible). Traditionally, an end-of-the-year profit taking ramps up in December. I can’t help thinking that the Marketeers who made a lot of money on SPY will likely sell high to capture those profits in 2023 instead of dragging them into the new year and in the face of a renewed Federal Budget battle (Jan 19th deadline). Perhaps I should wait until then.

QQQ:325p/4320p/X4 – Open 11/17/23 – Expires 09/30/24 – Max Gain = $284.00 – Open Price = 384.46
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM= 78.6%, Headroom= -15.6%, Max Loss= $1,716, AROR= 18.7%
Currently: Prob. OTM= 78.5%, Headroom= -15.5%, AROR= 18.7%

(11/15) The 180-day Trend is bullish, and the 20-day trajectory is a strong bounce from the 1-year Support Line. Nov 17 is the Fiscal Budget timebomb, but a Gov shutdown is unlikely. VIX < 15%, so I expect continued slow growth for the next month. (Of all ETFs, this is the only one that is all green.)

Vertical Spreads Currently Cooking

(As of 12/01/2023)

Note: hysteria over a shutdown happens multiple times every year. Highly partisan politicians go on national interviews stating Armageddon if they don’t get their minuscule way, and the Chicken Little media loves exacerbating the historic catastrophe upon us. Nevertheless, the geopolitical events that are boiling over (as of this post) have tanked my open Spreads. I’m not worried about it (he said shakily), but it makes my Mark to Market numbers sucky.

Note: Because it comprises small-cap funds, the Russell 2000 is a reasonable indicator of coming booms or busts. I use it as one of my indicators of what the Marketeers are feeling. Still, maybe I should remove it from my active ETFs due to its oversized volatility.

QQQ:315p/310p/X4 – Open 09/13/23 – Expires 06/28/24 – Max Gain = $272.00 – Open Price = 372.24
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM= 78.3%, Headroom= -15.4%, Max Loss= $1,728, AROR= 19.6%
Currently: Prob. OTM= 68.1%, Headroom= -9.1%, AROR= -92.2%

IWM:160p/155p/X4 – Open 09/05/23 – Expires 06/28/24 – Max Gain = $269.00 – Open Price = 353.21
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM= 77.7%, Headroom= -14.6%, Max Loss= $1,744, AROR= 17.8%
Currently: Prob. OTM= 55.4%, Headroom= -1.9%, AROR= -166.4%

DIA:315pp/310p/X4 – Open 08/09/23 – Expires 06/28/24 – Max Gain = $260.00 – Open Price = 353.21
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM= 76.6%, Headroom= -10.8%, Max Loss= $1,740, AROR= 16.6%
Currently: Prob. OTM= 65.1%, Headroom= -3.7%, AROR= -52.7%

SPY:405p/400p/X4 – Open 07/19/23 – Expires 06/28/24 – Max Gain = $284.00 – Open Price = 452.13
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM= 74.5%, Headroom= -10.5%, Max Loss= $1,716, AROR= 17.2%
Currently: Prob. OTM= 58.0%, Headroom= -2.0%, AROR= -65.7%

QQQ:325p/320p/X4 – Open 07/12/23 – Expires 06/28/24 – Max Gain = $336.00 – Open Price = 371.09
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM= 73.9%, Headroom= -12.4%, Max Loss= $1,664, AROR= 20.7%
Currently: Prob. OTM= 63.4%, Headroom= -6.4%, AROR= -43.2%

QQQ:305p/300p/X4 – Open 06/27/23 – Expires 06/21/24 – Max Gain = $296.00 – Open Price = 363.60
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM= 76.7%, Headroom= -16.1%, Max Loss= $1,704, AROR= 17.4%
Currently: Prob. OTM= 72.8%, Headroom= -12.2%, Max Loss= $1,704, AROR= -16.2%

(ITM) IWM:165p/155p/X2 – Open 06/16/23 – Expires 05/17/24 – Max Gain = $326.00 – Open Price = 186.96
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM= 71.8%, Headroom= -11.7%, Max Loss= $1,674, AROR= 21.0%
Currently: Prob. OTM= 48.3%, Headroom= +1.2%, Max Loss= $1,674, AROR= -66.6%

Note:

Vertical Spreads Closed This Month

(As of 12/01/2023)

QQQ:300p/290p/X2 – Open 06/08/23 – Expires 03/28/24 – Max Gain = $292.00 – Open Price = 355.66
(Vertical Bull Put Credit Spread)
At Open: Prob. OTM= 77.4%, Headroom= -15.7%, Max Loss= $1,734, AROR= 19.0%
At Close: Prob. OTM= 91.3%, Headroom= -20.5%, Max Loss= $1,734, AROR= 24.5%

Income at open: $1.33 premium collected * 100 shares * 2 contracts = $266.00
Cost to close: 0.40 premium paid * 100 shares * 2 contracts = $80.00 (closed after 157 days)
Net Profit = $266.00 to open – $80.00 to close – $4.00 fees = $182.00
AROR = ($182.00 / 157 days in play) * 365 / $1,724 = 24.5%

This was closed following my new Exit Rules of achieving more than 50% of max-gain and over 125% of the opening AROR. As a result, I outperformed the baseline S&P 500 year estimate of 16%.

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.

My Options Trading activities include cover calls, cash-secure puts, Vertical Spreads, and other options strategies. Cover calls and cash puts assume that I already have a sizable portfolio and accumulated cash to generate a meaningful income. But short-term Vertical Spreads do not require a substantial cash investment to make some fun money. – This blog’s sole focus is short-term Vertical Spreads.

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
I’m about to make the same mistake again.

-Damocles

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 are 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.”