A Nat Gas/ wheel trade Odyssey

I thought I would share a little trade example of my "premium over everything" life philosophy: a nat gas trade which started out as a short put after it got crushed from the huge late 2018 rip which notably wiped out Optionsellers.com --->
"It was a rogue wave.... I wake up every morning trying to steer the ship..."
That was a case study in itself, where he liquidated all client funds before spot was even at or near his short call strike prices.

Back to $UNG... anyway after that rip and drop, here you see spot around ~$22 which was a multi year low/ semi support if you believe in that, and where I got in with the first short put .. the 21.5p for 33c , which was my target range of 15%+ annualized premium, and an additional ~4% downside to breakeven, already at extreme lows.
 While this is an actual underlying/commodity, this is going in with the short VIX mindset/ short premium at least.

Well it turned ugly quickly!



Over the next ~month we went from $22 to $18.50, a nice ~20% bloodbath..

And here is where a live example of the clenched wheel strategy comes in.  Again, for trades like this always leg in, giving the option to lower your basis as it murders you like the above.  The green lines are the short puts, from the trade date spot to the option expiration date and strike.

I was assigned several tranches from 21.5 down to 19, getting the average cost around $20 by July

Once I've averaged down til the July range, you see the orange lines for short calls, to start lowering the basis on my assigned stock position.  (some of these were 1 lots, some bigger, I just wanted to give the feel of trajectories)

The final rightmost short calls you can see targeting my avg assigned stock price which was only 19.50/ $20, meaning the last big rip up was unnecessary for breakeven, but a welcome kick in the face from the fates nonetheless.

All in all, a grueling ~1% profit over 4 months on a 20% bloodbath underlying...

The most important thing being I didn't need the last rip, every trade is centered around the assumption in no move for you in the underlying.
This applies to $UVXY short call spreads/condors, very close ATM covered calls on dividend underlyings, or ITM covered calls.

LIFE NEVER GOES MY WAY, so trade like it!  Maybe this philosophy isn't for everyone, but it works for my mix of nihilism, fatalism, solipsism, simulation theory-ism, and if you believe in "late cycle."

I hope this was worth it for at least one of you! I'm trying to be the change I wish to see in the world- post bad trades, many adjustments, perseverance! 99% of financial interviews are just ignoring the guest's last missed prediction and moving on... That isn't real life!  The wheel trade is the grueling metaphor for the actual grind.