Hi folks, this will be the first post that documents the $5000 Robinhood trading account that I will be trying to get to $10,000 this year. Since this is started in mid March, I only have 9.5 months left of this challenge.

Last year, I was able to get a 43.5% return off my $10,000 account during the great 2021 bull run. However, this year, it has been a different market. I took out $9350 out of my trading account and put that money into other investments in the cryptocurrency Defi space. That leaves me with the current amount:

At the time of writing, the account is still down about 3.7% year to date. I have spent the majority of the first 2 months selling covered calls and reducing my cost basis for the stocks I was holding since last year. The 2 stocks I am holding are bitcoin miners Marathon Digital(MARA) and Hut 8 (HUT).

I was fortunate enough to sell enough premiums to make MARA a free stock to hold.

My cost basis is currently at -$12.95 for 100 shares. Looking to earn more premium over the coming years.

As for Hut 8, I was also able get the cost basis down to $0.28.

Hut 8 was first bought in September 2021.

Just like MARA, I am looking forward to earning more options premium as Bitcoin enters a potential sideways or bear market for the next 2 years until the next Bitcoin halving.

At the moment, the portfolio just has 2 stocks and will remain that way while the rest of the cash will be used for options.

Options Strategy Used

So the primary strategies that I will be using are mainly options:

  • Selling Covered Calls on MARA and HUT 8
  • Protective Collars
  • Poor Man’s Covered Call
  • Selling Cash-Secured Puts
  • Credit Spreads

These are the basic option strategies that worked really well for me so far. Had I not sold covered calls or run any protective collars, my account would probably be down 25% or more.

Trading Plan, Risk Management and Rules

Here are some hard rules that I follow on my account.

  • Think in terms of 1R, 2R, -1R etc (Where R is the risk amount – $50, $100, etc.)
  • Major Indices must be in uptrend or sideways (consolidation) and above the 200 daily moving average for long opportunities
  • Major Indices must be trading below the 200 daily moving average for short opportunities
  • Sell 0.15-0.5 delta Cash-Secured Puts if neutral to bullish (only in sideways and uptrends)
  • Sell 0.1-0.3 delta Covered Calls if bullish on stock (only in uptrends)
  • Sell 0.5 to 0.9 delta Covered Calls to protect capital (only in downtrends)
  • Never trade or sell options into earnings unless it is hedged

For risk management, I do not risk more than $100 (1R) per options trade. That means the most I would lose is that amount unless the stock I trade gaps down or up against me, causing me to lose more than that. That rarely happens and I will have to take the loss regardless of what the stock does after.

Trading Routine

Market Conditions and Research

  • Check Monthly, Weekly, then Daily time frame for all 4 major indices
  • Make a habit to look at Monthly and Weekly first
  • Look at the major indexes tracking the individual sectors weekly
  • Long bias when indices are above the 20 day ema on the weekly chart
  • Long in bull market (above 200 day sma daily)
  • Short in bear market (below 200 day sma daily)

Market Sentiment

These give me a good idea on how the general public feels about the market at the moment.

Sector Indexes

I primary look at them on Tradingview. It gives me a good idea of how the overall market is doing so that I can create my thesis on whether I should be hedging, be aggressive and make some plays, or sit in cash.

Stocks or Indexes Trading Criteria

Since this account is small, I will be limited to stocks that are trading below $100. That usually means I am selling options on stocks below $20 and these are usually small cap stocks.

Criteria 1: Only own stocks less than $20

However, stocks have quarterly earnings and there are a lot of gaps, so I tend to look for stocks that do not gap heavily up or down. MARA and HUT 8 do fit the criteria. They also follow bitcoin mostly, so I can anticipate the small gaps a lot better than a regular stock.

Criteria 2: Never Sell or Buy Options into EarningsĀ 

This one is a hard rule that I will never break as the gaps can go very well for you or end up terribly wrong. It is not the upside that I fear missing out on, but it is the -20-50% gap down that will destroy my account. However, if I am holding a long term stock into earnings, I will always protect it with options.

Criteria 3: No Gappy Stocks

I do not trade any stocks that gaps up and down all the time. Examples are some of the commodities such as Gold ETF (GLD), Carbon ETF (KRBN) or foreign stocks like Tencent (TCEHY) or Volkswagen (VWAGY).

Criteria 4: Trade Stocks with Mid-High Volatility for Options

While volatility goes both ways for profits and losses, it is really good for selling options premium. Having higher premium will also help mitigate the downsides if done properly. I generally look for an implied volatility of the stock from 50% to 150%.


I will be updating this on a monthly basis at the end of the month and share the trades I made, be it profits or losses. Not only will that help keep me accountable, it will also keep me grounded as I have data on my own trading behaviour and I can see how I perform in various conditions.

By kenny