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Day 128
·
Mar 10
I feel that I am nearing an inflection point in my trading journey. I was able to close the problematic trade (short call spread on SNDK) for a profit, despite being deep in the red for weeks. By doing so, I was able to significantly expand my trading comfort zone. I had to increase the capital at stake over my predefined limits, and that was a strong psychological test (and a hard one to say the least).
For the context, I’ve sold a 310/320 call spread on SNDK on Jan 2, 2026.
The stock went up to 700+ (more than double) in less than 8 weeks after this. I’ve rolled the calls every week and had to widen the spread. What started as a trade risk of 1k$ on the initial trade, spiraled into 8 call spreads with a total of over 80k$+ at risk and growing. Yes, I’ve got into shorting a parabola, and I doubled down on it.
Managing bad trades in this trading strategy is where most of the skill/alpha is, in my opinion. In this specific trade, it could be argued that I should have taken a loss early or maybe even switch sides (that 2nd option never made sense to me, however).
Anyway, by reviewing my trades log, I came up with 2 key insights.
1) My call rolling strategy was bad. Instead of waiting for the expiration day to roll ITM calls, the stock provided a lot of volatility during the weekdays, and I could have rolled up the call way more efficiently before the Friday expirations. I was hoping for the calls to be OTM on Friday, but “hope is never a strategy”.
2) I should have widened the call spread more aggressively and rolled up the strike further. Paradoxically, by trying to contain the trade risk by keeping the spread narrow, I wasn’t able to increase the strike up by much on each roll. So by trying to keep my trade risk low, I actually keep the call more ITM and longer, instead of reaching escape velocity on the strike versus the stock price appreciation.
While the trade management failed somewhere, I think some other things were learned.