Figured I’d share because I’ve been doing the same strategy for a few years and it has been rewarding. I used to be of the mindset that tinkering beyond buy and hold will usually cause you to underperform the market but the works well for me. The overlay has been a profitable venture overall and is in addition to portfolio returns from underlying holdings.
# The core portfolio
Long-term holdings are SCHG (US growth) and VT (global diversification). I know SCHG will chop hard in some environments, but I believe in the methodology over a long horizon. Yes, there’s overlap between top holdings in SCHG and VT — I don’t care. I didn’t want to just bolt on a pure international fund.
# The options overlay
This an income overlay on top of the ETF core holdings meant to generate premium.
• **Underlying**: Mostly RUT (cash-settled, \~half the notional of SPX, which fits my account size better). I will sell against SPX if I don’t like the setup of RUT.
• **Structure**: 0DTE, sold at the open
• **Directional bias**: Generally will fade the move on the hourly chart. ie if the market gaps up 1%+ and is pushing through the upper Bollinger Band, I sell a call \~1–1.5% further OTM into that strength. Usually under 20 delta, but there is no fixed requirement here. Same concept in the other direction with puts.
The extreme moves are the most reliable to fade. The chop in the middle of the Bollinger range is where you eat moves that are outsized relative to the premium you’re actually getting paid to take the risk.
I will either withdraw the premium collected and move it to my “reserve” account, which is largely short term bonds and credit, OR will redeploy into more shares.
# Results (trailing 1 year)
Portfolio performance: +26.96% (portfolio + options return)
Net premium collected: $16,038.83 (gross $31,833.89)
Avg daily net capture: $81
Trade win rate: 89.95%
Total trades: 198
Cashflow’s been steady with a few red days mixed in (see chart); nothing that’s dented the overall equity curve, but definitely a reminder this isn’t a “free money” strategy. The red bars are exactly the middle-of-the-band chop I mentioned above.
Happy to answer questions on trade selection, sizing, or how I’m thinking about strike distance in different vol regimes.
Not financial advice, just sharing what I’m doing and tracking