How Options Trading Help Me Deal With My 6-Figure Investment Loss?

My investing journey started on 15 July 2012. It was smooth sailing initially as the stock market was on a bull run and many stocks that I bought made money. But that also lead to my investment downfall as I started buying stocks on the recommendation of others, without doing much of a research. The oil and gas stocks such as Sembcorp Marine and Keppel Corp were very popular back then and I bought many lots of those stocks. When the oil price crashed subsequently, my stock dropped significantly in value. Keppel Corp was at one stage near $12 but it struggles to hit $5.50 today. I remembered buying Sembcorp Marine at $4+ and today, it was only worth 8 cents. There was also SPH that was a solid dividend paying blue chip company whose fortunes declined due to the rise of social media.

As you can see from the above table, most of my losses range between 36.53% to 94.70%. I still hold onto these stocks today as most of my initial capital is already wiped out due to the huge drop in share price. Despite averaging down over the years, the total loss in this portfolio is still at 6 figures. The only silver lining is that some stocks are still paying dividend at a higher interest rate than what the banks are giving but it will take forever to get my capital back.

There were 2 turning point in my investing journey that helped me reverse my fortune and they happened in 2020 and 2021. When the stock market crashed in 2020 due to the pandemic, I took the opportunity to load up Singapore bank stocks at a very discounted price. I have always wanted to own Singapore bank shares but they were too pricey for my liking. The banks stocks that I have bought during 2020 have risen quite a lot in value and that helped to reduce my paper loss from 6 figures to 5 figures.

The game changer came in 2021 when I finally had the courage to leave the “safe haven” of Straits Times Index (STI) to venture into the volatile US market as well as to learn and try out options trading. As I started my first investment on 15 July 12, my full investment year will typically start on 15 July and end on 14 July of the next year.

The below 2 tables show my records of options trading from 26 Feb 21, where I sold my first PUT options contract on Apple, to the present day. Since my investment year ends on 14 July, that also concluded my short first year of options trading from 26 Feb 21 to 15 July 21.

The 2nd year of my options trading started on 15 July 21 and it has been rewarding so far, especially when my LEAPS strategy works perfectly in a bull market. As you can see from my records (highlighted in light blue), most of my LEAPS give returns of more than 10%, with some of them happening in less than a month.

Moving forward, I intend to reduce my portfolio allocation in LEAPS and shift some of my capital to doing the Wheel Strategy (Puts & Calls). While it gives lower returns, it is more flexible in terms of generating income for me when the market goes sideways or downwards. As I have learnt from the September slumber, the bull run does not last forever and there will be periods where stocks consolidate or correct.

I hope this sharing brings some encouragement to friends who are suffering heavy losses in your investment. I always believe that everything happens for a reason and the mistakes we make, whether related to investing or not, are there to make us a wiser and better person altogether. The investing runway is long ahead and there will always be opportunities to recoup your losses, if you don’t give up and put in the effort to learn. I wish you all the best in your investing journey and may you find wealth and prosperity to share with the ones you care most.

Related Articles:
How PUT Option Works
How Call Option Works
How Does The WHEEL Strategy Works?
How I Use LEAPS To 10X My Returns
I Made 8.6% Returns In 35 Days By Buying Nvidia Share Option Contract (15 Oct 21)

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