Four small winners, six losers including four monster hits, and two big losers, makes for a terrible month of trading. Selling naked puts was the wrong place to be this month. I survived the flash crash last year, and the carnage in 2008, and survived this, but each time took some hits. GLD went up 20%, and SPY went down 20%, however when selling puts, the winning trade only yields 100% profit, while the loser might be a 2000% loser.
The losses did major damage. I don't like to talk about overall account percentages or specific dollar amounts, because those tend be correlated with risk appetite and how much capital is available. I will categorize the losses as significant and painful, though not crippling--I am still in the game.
The other analogy that comes to mind is putting lipstick on a pig. No matter how a person tries to pretty up the pig, there is only so much improvement to be done with makeup. The losses are closed trades and now done with. I think it would be a mistake to try to get it all back in a few trades. Revenge trades usually result in more losses and make a bad situation worse.
Going forward, I have two short put backratios on SPY, and a long vertical put spread. This adds up to a positive SPY delta, positive theta, and a breakeven point to the downside of 95. Best case would be a SPY close right at 105 for September expiration, and then a close at 104 for October. If SPY rallies, I would profit from here. I am short some puts on GLD and TLT, but because of the rallies, the delta is small. I am reluctant to sell more puts on GLD because the run up has left little support below. A steep correction in gold would surprise no one, but so far those betting on that event have been big losers.
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