48 Hours to Expiry: My Game Plan for This Week’s Options Madness

 We’ve all been there. You open your brokerage app, and the screen is a sea of green and orange. It’s Wednesday, January 14th, and I have a handful of positions expiring this Friday. Some are "set it and forget it," but others? They’re requiring some serious math and a bit of soul-searching.

If you’ve been following my journey, you know I love selling premium. It’s that sweet "Theta decay" that lets me sleep (mostly) soundly while time eats away at the value of the contracts I’ve sold. But this week, things are getting spicy.

The Elephant in the Room: My Confluent (CFLT) Dilemma

Let’s talk about the big one: CFLT. I sold a $23 Call that expires this Friday. Right now, that contract is trading at $7.65.

Here is where the personal math comes in: My average cost for CFLT is $18. Because the stock is trading so high (implied price around $30.65), my "sold" call is deep in the money. If I do nothing and let it expire:

• The "Loss": I’ll feel like I'm losing out on that extra $7.65 per share of upside.

• The Reality: I’ll be forced to sell my shares at $23. Since my cost basis is $18, I’m still walking away with a $5/share profit (plus the original premium I collected).

It’s a "task failed successfully" moment. I’m being "forced" to take a profit, even if I’m leaving money on the table. Do I buy it back to keep the shares, or just take the win and move on? I’m leaning toward letting the shares go and high-fiving myself for a successful trade.

The Rest of the Roster

While CFLT is the headliner, the rest of the portfolio is a mix of "easy wins" and "sweaty palms":

• The "Free Money" Crew: My short calls on SMCI ($53), SOUN ($22), and HOOD ($135) are all trading for $0.01 to $0.04. These are essentially dead in the water. I’m happy to let these expire worthless and keep every cent of that premium.

• The ROBN & SOFI Puts: These are a bit closer to the pin. My ROBN $56 Put is at $1.05. If Robinhood dips below $56 by Friday, I’m buying 100 shares. Honestly? I don't mind owning the stock at that price, so I’m letting this one ride.

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The $950 Lesson: Transparency, Puts, and the Reality of the "Moonshot"

• The Reddit Moonshot: I have one RDDT $300 Call I bought for pennies. It’s worth $0.03 now. Is Reddit going to $300 in 48 hours? Highly unlikely. But hey, every portfolio needs a little "what if" energy.

There’s a specific kind of silence that happens when you open your portfolio and see a trade you once had high hopes for sitting at a -99.7% loss.

For me, that’s the RDDT $300 Call.

I bought this back in October 2025. At the time, Reddit was the darling of the market, the $300 price targets were flying around from analysts, and I felt like I was catching a rocket ship. I put $950 on the line. Today? It’s worth $3.

It’s a "good loss." Why? Because it’s a reminder that even when you’re right about a company (Reddit has actually performed well), you can still be wrong about the timing and the theta.

My Strategy for Friday

When you're selling options, you have to be okay with the outcomes. For me, Friday is about simplification.

1. CFLT: I’m likely going to let the shares get called away. A profit is a profit, and I can always sell puts to get back into the position at a lower price later.

2. Lotto Tickets: I'll let the RDDT call expire. It was a cheap thrill.

3. The Sells: I'll let the OTM calls expire to clear up my "Positions Held" screen for next week's trades.

Trading isn't just about the charts; it's about managing your own psychology when the clock is ticking.

Options Trading Recap: SOUN and HOOD Trades

 On January 6, 2025, I executed three options trades involving SoundHound AI Inc. (SOUN) and Robinhood Markets Inc. (HOOD). Let's break down these trades and their outcomes.

SoundHound AI (SOUN) Trades

1. SOUN $24 Call (Expiration: 1/10/2025)

• Action: Sold call option
• Premium received: $96
• Outcome: Expired worthless, full premium captured

This trade worked out in my favor. The call option expired out of the money, allowing me to keep the entire premium without any obligation. This call was based on my previous put assignment 

2. SOUN $21 Put (Expiration: 1/10/2025)

• Action: Sold put option
• Premium received: $80
• Outcome: Assigned at $21, with share price at $14.09

This trade didn't go as planned. The significant drop in SOUN's share price led to assignment, resulting in a substantial loss. The total loss on this trade, accounting for the premium received, was $611.

Robinhood Markets (HOOD) Trade

3. HOOD $41 Put (Expiration: 1/10/2025)

• Action: Sold put option
• Premium received: $50
• Outcome: Assigned at $41, with share price at $40.08

This trade also resulted in assignment, but with a much smaller loss. After accounting for the premium received, the net loss on this trade was $42.This is one i was hoping to capture at lower prices.

Trade Analysis

My total premium income from these trades was $226. However, the losses from the assigned puts outweighed this income, resulting in a net loss of $427.The SOUN call option strategy worked well, but the put options on both SOUN and HOOD exposed me to downside risk that materialized. The significant drop in SOUN's share price was particularly impactful.

Looking Forward

As I move forward, it's crucial to reassess my risk management strategies, especially when selling put options on volatile stocks like SOUN. Recent news suggests that SOUN has been experiencing significant price movements, with a 63.12% increase in just one week prior to my trades. This volatility, while potentially profitable, also carries substantial risk.Additionally, insider selling activity at SOUN might be a signal to watch closely in future trades. As always, thorough research and careful consideration of market conditions are essential for successful options trading.Remember, options trading carries inherent risks, and past performance doesn't guarantee future results. Always conduct your own due diligence and consider your risk tolerance before entering any trades.

Analyzing My Options Trading: A Snapshot of HOOD and Soun Trades

 

Recent Trades Breakdown

December 30, 2024:

1. Sold $SOUN $21 Put 1/3

   • Option Premium: $62

   • Outcome: Got assigned; the share price was at $20.62

   • Analysis: This put was exercised, and I ended up holding the shares at an effective price of $20.62, minus the premium received. This brought my cost basis lower, which is beneficial if the stock appreciates.

2. Sold $HOOD $37 Put 1/3

   • Option Premium: $57

   • Outcome: Expired worthless

   • Analysis: Success! This option expired worthless, and I captured the premium without having to purchase the stock. The stock price remained above $37, making it a profitable trade.

3. Sold $SOUN $19.5 Put 1/3

   • Option Premium: $64

   • Outcome: Expired worthless

   • Analysis: Another win! The stock price stayed above $19.5, and I pocketed the premium without having to buy shares.

January 6, 2025:

1. Sold $SOUN $24 Call 1/10

   • Option Premium: $96

   • Analysis: This covered call strategy is a great way to generate income. If the stock price goes above $24, I'll sell the shares at $24, locking in potential gains if the share price is higher.This is from the earlier put assignment

2. Sold $SOUN $21 Put 1/10

   • Option Premium: $80

   • Analysis: Similar to previous put sales, I earn premium income. I'll need to buy the stock if it falls below $21 by the expiration date.

3. Sold $HOOD $41 Put 1/10

   • Option Premium: $50

   • Analysis: Another premium-earning put sale. If the stock price falls below $41, I'll need to purchase shares at that price.

My Core Strategy: Cash-Secured Puts Rolled into Covered Calls

Most of my trades revolve around selling cash-secured puts. If these puts get assigned, I then roll them into covered calls. Here's how it works:

1. Cash-Secured Puts:

   • I sell put options secured by enough cash to buy the underlying stock if assigned.

   • If the stock price stays above the strike price, I keep the premium.

   • If the stock price falls below the strike price, I buy the stock at the strike price, effectively getting it at a discount (strike price minus the premium received).

2. Covered Calls:

   • If I'm assigned the stock from the cash-secured put, I sell covered calls on those shares.

   • This generates additional premium income while setting a target selling price for the stock.

   • If the stock price rises above the call strike price, I sell the stock at that price, capturing gains plus the premium.

Benefits of This Strategy

• Income Generation: Earn premiums from both the put and call options, providing a steady stream of income.

• Downside Protection: The premiums received from selling puts and calls help offset potential losses.

• Flexibility: If the stock doesn't get assigned, I can sell puts again. If assigned, I can continue generating income through covered calls.

• Reduced Cost Basis: The premiums received lower my effective cost basis, making it easier to achieve profitability.

SMCI Options

 Options trading can be a powerful tool for investors looking to enhance portfolio returns and manage risk. Recently, I implemented a strategy by selling PUT options on Super Micro Computer, Inc. (SMCI). In this post, I’ll walk through the rationale behind the trades, the potential outcomes, and how this strategy fits into a broader investment approach.

The Trades:

• 10/10/2024: Sold SMCI $40 PUT expiring on 10/25/2024 for a premium of $81.

Rolled the above call into below call.

• 10/11/2024: Sold SMCI $40.5 PUT expiring on 11/01/2024 for a premium of $55.

Both trades involve collecting premium income while managing the risk of potentially acquiring shares of SMCI at prices lower than their current market value.

This Brought a total $136 in  premiums.

Given the volatility and recent upward movement in the tech sector, Here’s why:

1. High Volatility: Higher volatility in stocks leads to higher option premiums, which translates into more income for PUT sellers.
2. Growth Potential: If I end up being assigned shares at my strike price, I could own SMCI at a discount to current levels, which is attractive considering the company’s long-term growth potential in AI and data infrastructure.

hat’s a PUT Option?

When selling a PUT option, I’m agreeing to potentially buy 100 shares of the underlying stock (SMCI in this case) at a specific price (the strike price) if the stock falls below that price by the expiration date. In return, I collect a premium upfront, which is my income regardless of the outcome.

Breakdown of My Trades:

1. SMCI $40 PUT, expiring 10/25/2024

   • Premium Collected: $81
   • Breakeven Price: $40 (strike price) - $0.81 (premium) = $39.19
   • Outcome: If SMCI stays above $40 by 10/25, I keep the $81, and the option expires worthless. If it falls below $40, I’m obligated to buy 100 shares of SMCI at an effective price of $39.19.

2. SMCI $40.5 PUT, expiring 11/01/2024

• Premium Collected: $55
• Breakeven Price: $40.50 (strike price) - $0.55 (premium) = $39.95
• Outcome: If SMCI stays above $40.50 by 11/01, I keep the $55. If it drops below $40.50, I buy 100 shares at an effective price of $39.95.

otential Scenarios and Outcomes

1. Scenario 1: PUTs Expire Worthless
   In the ideal scenario, SMCI’s stock price stays above $40 and $40.50, and neither PUT is exercised. This means:

   • I keep the total premium of $136 ($81 + $55) as profit.
   • I don’t have to buy any shares, leaving my cash available for future trades.

2. Scenario 2: PUT is Assigned
   If SMCI’s stock falls below $40 or $40.50, I’m obligated to buy 100 shares per contract at the strike prices. Here’s the math:

   • For the $40.50 PUT, my effective purchase price would be $39.95.

   These prices could represent an attractive entry point into SMCI if I believe in the company’s long-term growth prospects, particularly with its positioning in AI and data center markets.