Making 35.66% in my first year of selling options (thanks to poor risk management and meme stocks)

End of year report:

I opened my Robinhood account on December 31 2020. As of today the "1 year" and "all time" charts will say different things, so *that* is a muscle memory thing I need to unlearn..

Top of the line: up 35.66% percent this year

Not only is this like 8% higher than SPY, based on the way Robinhood handles total return graphs this is actually understating it due to the fact that I added money during the year. If I deposited my entire account balance tonight said percentage performance would be cut in half since it assumes all deposited cash increases the initial cost basis.

Max drawdown: 12% (still haven't fully recovered)

Measured from my account's ATH in November to the trough in.... well later November. RIP meme stocks. At least we stopped the bleeding.

Holdings types:

Even though I call it my "options account" about 1/3rd of it is in various ETFs (and a microscopic amount of BRK.A) that I'm not using as collateral for options plays. This is the money I had earned from political betting on PredictIt, plus whatever I decide to throw in every once in a while. This is segregated a bit, as I literally haven't rebalanced at all and don't consider selling these ETFs for more theta gang plays.

The options portion is funded entirely through stimulus checks, tax refunds, and the realized gains from options trades. This is to reduce stress in case I fuck up because why panic sell if it's "fun money"?

General strategies:

I did a little bit of everything theta gang related. Debit spreads, credit spreads, wheeling with covered calls and selling puts, diagonal spreads with deep in the money calls to simulate a covered call with leverage, doing the same to simulate selling a put with leverage, etc. Somehow managed to control positions in a way so I could keep rolling for a realized gain rather than be forced to realize a loss (without being stupid and rolling out 2 months for a 5 cent net credit).

Favorite positions:

Wheel trading AMC and BlackBerry. No leverage, just selling puts and making money until you're assigned then selling covered calls until you're assigned. Being meme stocks, I could afford to have stupid timing and make money.

Least favorite positions:

Buying Ford and Nokia LEAPS with 3 to 1 and 6 to 1 leverage to sell covered calls against right before they both trended down. Yeah... not fun. Haven't worried about a position that hard since. The sweet spot is clearly 2 to 1. Less extrinsic value that way.

Taxes:

My taxable gains is slightly higher than the amount I'm up due to unrealized losses. Let's hope I didn't violate the wash sale rule. And I can just import my 20 page 1099.

Payment for order flow:

According to regulatory filings, Robinhood makes 60 cents in revenue for each options contract traded. So I generated approximately $530 in payment for order flow revenue for them, more than probably any other financial thing besides my car lease. This is based on the trades I've already done and the inevitable closing of contracts I currently have.

Targets for next year:

Use less leverage, don't sell weekly stock options (for various reasons), and buy more LEAPS debit spreads that just need the underlying to not plummet 9 months to a year from now in order to make money while reducing reliance on meme stocks.

All around a good year. I have no idea if these returns are sustainable absent of a strong bull market or a market full of meme stocks with a much higher implied volatility than realized volatility to take advantage of in options pricing. But since I'm taking advantage of theta decay for almost all of these strategies, I am far less likely to be BTFO'd than if i bought ATM LEAPS if markets go down or sideways.

But yeah, I'm tempting fate if I go as far to say this literally can't go tits up lmao.

***Disclaimer: options trading is a speculative investment. It includes market risk, liquidity risk, volatility risk, and getting screwed for reasons you didn't think of risk. Ask a financial advisor if options trading on Robinhood is right for you, and fire them if they say it is. You should not be doing this under most circumstances. I shouldn't either, but it's too late for that. Buy SPY, QQQ, and/or VTI before it's too late, I am warning you.***

***Please read the prospectus before considering investing. Past performance does not guarantee future results. Especially if said performance only covers bull markets.***