ToC
We have several strategies:
- the wheel, which is really a covered call
- credit put spread, and
- credit call spread
We're looking to make money in any and all market conditions: when the market is going up, going down, or going sideways.
Over the last... decade of trading, I have been burned several times, quite harshly. When I had a net short position, that hurt, and net long positions sometimes go in a prolonged slumber, which runs contrary to my expectation of making money "at all times."
I have previously decided that my position has to be net-long (_TODO). This is due to the fact that inflation pushes all valuations up, so if nothing else, inflation will cause prices to rise. (And I generally play on individual stocks, because I play on volatility.) You would still have to be careful not to bet on a stock that may go bankrupt - inflation will not save you, if your underlying becomes worthless. Still, on many examples, in 2026 there are many opportunities to trade using public companies. Take the magnificent 7 as an example - but pretty much anything in S&P500 would do.
So I'm currenlty considering having two parts in my portfolio: the long and the short. When I had only the long positions, that worked well while the market was going up, or going sideways. However, for us mere mortals, it is unavoidable to see the markets go down at some point. What then?
For this reason and for this reason alone, I seem to require a short component. One approach to implementing it is, to enter iron condor positions. That is, for a stock XYZ trading at $105, you'd have a credit put spread:
- +1 XYZ $70 PUT
- -1 XYZ $80 PUT
Which ties up $1k of capital, and at the same time have a call spread:
- -1 XYZ $120 CALL
- +1 XYZ $130 CALL
Which does not tie up any additional capital - the margin requirement is shared between these two positions.
And let me tell you, that went terribly! I get PTSD just thinking about it. Even if I make the right bet, I still lose. I can't exit or even roll the position without a loss - so, a loss is guaranteed. Whoever said (or keeps saying) that iron condors is a good idea because it's twice more money, or whatever, has obviously never tried making money this way. Because it doesn't work. Or hasn't worked for me, and I hate it.
_TODO: explain.
However, the idea of having both a long position (credit put spread), and a short position (credit call spread), makes a lot of sense. So how can I have them both, without tying them to one another?
Well, I can have a short position on one underlying, and a long position on another underlying. All the stock moves in tandem nowadays, so the two should behave almost as if they are positions on the same stock. You can even pick such unrelated stocks that you believe one will not go up much (short it): maybe one is technology but another is energy. Or maybe one is technology and another is cyclical consumer goods. You name it.
And the disadvantage of this of course would be that the margin requirement doubles. No longer can I have two $1k spreads for $1k, now it will cost $2k. But I'm currently considering that that is perfectly fine. Let me double my portfolio (I'm playing with tiny, toy numbers anyway) and if only half of my portfolio is making money at any given time... that would still be alright with me.
And so if, let's say, I believe we are in an up-market (bull market) and everything is going up, I may still hold both long and short positions. While long put spread may be at deltas 0.10-0.17, the short call spread may be at deltas 0.05-0.02. Which is to say, I am not expecting to make money off of the short position - I just want it to carry on, until the bull market stops.
Disclaimer: I haven't tried implementing the above yet. It is my next experiment.