CSP Update Week Jan 9 to Jan 15, 2021

 Week 9 to 15 Jan, 2021.  Cash Secured Put Update:-

The net profit for this week from CSP strategy: $ 1,449.50; ROI: 2.61% per week.

I am taking conservative approach of CSP.  I set aside about 1/3 of total buying power for CSP, besides long term shares, I also set 1/3 to manage covered calls positions.

Starting with strategy, there are two types of puts selling:-

Type 1) selling puts for income; for this type, my goal is income, I don't want to get assigned, therefore, high IV rank, reasonable high ROR, and relative lower RSI are the keys criteria in selection of tickers and entry timing; the put I selling typically is around .30 delta; and very often, I don't hold till expiry.

Type 2) Selling puts for Long stock with discount, identify growing or potential stock for long term investment. Cathy Woods listed out 5 disruptive innovation sectors in which ARK has been solely focused, those are potential long term investment, I set my own price targets on some of those stocks, selling puts till being assigned. For this type, the company's fundamentals is more important than TA;

CSP is very capital intensive, so proper allocation and right position size are important. To keep enough Buying Power is crucial when adjustment and rolling are needed. Typically, you should have at least 1/3 of your total capital size as BB to standby.

One last words on Return on Risk. ROR=Premium /strike price, personally, ROR >1.0% for 10 days is good enough, I don't think it necessary to chase after ROR, different trader has different risk appetite and risk management skills,

Wish you all have a good weekend.