Options Weekly Review: Why is my account still profitable despite "floating losses"?

1. Options Trader's Weekly Recap of My Three Options Trades last Week : $S&P 7xLongSG260226(SPXW.SI)$ $Alibaba(BABA)$ $Micron Technology(MU)$

Hello everyone, due to the holiday, this week only had 3 trading days, during which I executed 3 options-related strategies. While the number of trades is small, they are highly representative in terms of intraday execution, shorting at high levels, and profit-taking discipline.

This article mainly has three structures: my options trading review, how I profited, and a summary of my trading discipline and methodology.

1. S&P 500 (SPXW) Intraday Options Strategy

Underlying Asset: $S&P 500(.SPX)$

Strategy: Sell SPXW 0120 6770 PUT, Buy SPXW 0120 6750 PUT.

Strategy Type: Intraday Strategy / Intraday Trading

Characteristics:

• Extremely high leverage

• Profit and loss mainly come from intraday fluctuations

• Extremely high requirements for monitoring the market

Intraday Performance:

• The index rose rapidly after opening, once increasing by nearly 1% intraday

• Corresponding option structure, intraday profit reached over 90%

Current Status: Closed and profitable

2. $Alibaba(BABA)$ High-Level Short Selling Strategy

Strategy: Sell BABA 0123 172.5 CALL, buy BABA 0123 180 CALL

Strategy Type: Event-Driven + Sentiment Trading

Background Logic:

• Market speculation on the potential listing of Pingtouge Semiconductor

• Rapidly rising valuations of A-share semiconductors, with sentiment spilling over to Chinese concept stocks

• Alibaba's stock price has risen by approximately 20%–30% cumulatively in the past two months

Characteristics:

• High-level entry

• Significant sentiment premium

• Overseas markets have limited acceptance of the "semiconductor story valuation."

Current Status: Buying in, continuing short selling

3. $Micron Technology(MU)$ Short Selling Strategy

Strategy: Sell MU 0123 402.5 CALL, buy MU 0123 412.5 CALL

Strategy Nature: Trading on a pullback from a high point in a popular stock

Position Building Stage: At a temporary high

Characteristics:

• Popular stock

• High valuation

• Suitable for shorting stocks through options structures rather than directly

Trading Process Review:

• Short selling during the day was followed by a post-market rally

• Short-term paper pressure

• Subsequently, the overall tech stock market retreated, and the trend returned to expectations.

Current Status: Position closed with profit

II. Periodic Review: Why is the account still profitable despite "floating losses"?

Recently, many targets in the demo account have shown paper losses:

$Apple(AAPL)$ , $Alibaba(BABA)$ , $Micron Technology(MU)$ , $NVIDIA(NVDA)$ , $iShares 20+ Year Treasury Bond ETF(TLT)$

However, the overall account remains profitable.

The key is not whether there are unrealized losses, but the position structure and whether it constitutes a permanent loss.

(I) My decision to "take over" a position depends on only two questions:

For me, whether to take over a position is never based on emotions, but only on these two questions:

1. Is the account balance large enough?

2. Will the position threaten the account's survival?

In a demo account:

• Larger account size

• Single takeover size is usually 100–1500 shares

• Minimal impact on the overall account → Can withstand volatility.

But for a small account of $20,000–$50,000:

• A single takeover could cause structural damage.

• In this case:

• Stop-loss is necessary; taking over is not advisable.

(II) What constitutes a true "permanent loss"?

My definition of permanent loss is very simple:

• Not short-term unrealized losses

• Rather:

• A substantial deterioration in the company's fundamentals

• Lack of the ability to reach new highs in the long term

Examples:

• $Apple(AAPL)$ / $NVIDIA(NVDA)$ $iShares 20+ Year Treasury Bond ETF(TLT)$

These all fall under my definition of high-quality assets

• Even if the options strategy fails and is forced to switch to a stock position:

• There is still time

• There is still room for fundamental recovery

• Therefore:

• It does not constitute a permanent loss

(III) Why might "taking over" be an advantage after an options failure?

Many people overlook one point:

• Options losses ≠ the end of the trade

• Converting failed options trades to stock positions actually increases operational flexibility:

• Trading time for space

• Rolling out call options

• Portfolio adjustments, hedging, and phased exits

Historical experience:

• Repeatedly taking over positions after failed short selling of Alibaba

• Ultimately, through subsequent operations:

• Achieving a turnaround

• Higher total returns

III. Summary of My Core Trading Discipline and Methodology

1. Short-term strategy = Must take profit

• All short-term/intraday strategies:

• I will seriously consider closing positions when profits reach 50%–60%

• Pitfalls I've repeatedly fallen into:

• Greed for the "last bite"

• The result is often:

• Trading multiple successful trades for a large drawdown

2. How to continue when the short-selling logic remains unchanged? —Rolling (Position Roll)

When:

• The bearish logic still holds

• But the target price wasn't reached by expiration

My usual approach is:

• Sell the current contract

• Roll the position to the next period

Only two prerequisites:

• Low position size (10%–20%)

• Doesn't affect overall account security

Disclaimer: The above content is merely my personal trading review and experience summary. The option structures and underlying assets mentioned do not constitute any direct investment advice.

Options trading carries high risk. Please make independent decisions based on your own capital size and risk tolerance.