“I do not have a huge capital, but can I start options trading?”
I have been asked this question a few times by our readers and so, I will be sharing my thoughts in this article. However, before I give my view, I would like to share some of the trades that I have made this year.
On 5 April, I sold a cash secured PUT contract (reserved $4,500) for 32 days and collected a premium of $520 (>10%).
On 24 April, I bought an AMD LEAPS (CALL) for $2,960. On 1 July, I sold the LEAPS for $3,400 and made a profit of $890.
On 13 Aug, I bought a Microsoft LEAPS (CALL) for $2,800. On the same month 27 Aug, I sold the LEAPS for $3,610 and made a profit on $810.
On 1 Sept, I bought 2 Pfizaer LEAPS (CALL) for $568. On 15 Nov, I sold the LEAPS for $880 and made a profit of $312.
On 22 Sept, I bought a Nvidia LEAPS (CALL) for $1,740. In less than 2 month, on 15 Nov, I sold the LEAPS for $7,100 and made a profit of $5,360.
Therefore, based on the above examples, it is possible to start options trading with a small budget and still make some profits out of it, provided you chose the right stocks at the right time. Depending on the budget you have, you can either buy LEAPS on a lower premium and wait for share price to rise before selling them or you can do the wheel strategy and sell cash secured puts or covered calls on the stocks that are not current trading on a high price.
To get started on options trading, do check out the newbie guide that I have prepared for you. Link below:
The Newbie’s Guide To Options Trading
Learning Investment With Jason Cai 
Is there a place where we can see your entries on these trades in real-time?
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Hi Peter, I do share my trades after I made them in this section:
https://learninginvestmentwithjasoncai.com/tag/my-trades/
But they are not updated on real-time though 🙂
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Hi Jason. I have traded options unsuccessfully in the past, with a small account. One of the key issues I faced was the pattern trader restrictions (for accounts smaller than US$25k). May I know if you have any strategies in avoiding this restriction? Thank you.
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Hey James, which platform are you using? I would suggest calling the hotline to ask how you can mitigate this. I started my ibbr account with less than 25k and I managed to sell PUT on Apple as my first trade.
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Hey Jason. Thanks so much for taking the time to reply to my query. I was using IB as well previously. If I recall, the pattern trader restriction applies if you buy and sell the same option within the same trading day. And if you do it 3 times (within 5 days, if I remember correctly), one will be hit by the pattern trader restriction. It is a bit like day trading options, so to speak. Perhaps it may not apply to you as I believe the sale of your option purchased, is usually the day after (of a few days later) the initial purchase. I assume that is correct, at your end?
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Hi James, oh, for the PUT options that I sold, it is cash secured, which means I already have that amount (SP x 100) in my account as the collateral in case the contract gets assigned. I am also using a cash account instead of a margins account.
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Yes. I think that could be the main difference between my previous trading (which was a margin acct) account and yours. However, I am not sure if the pattern trader restrictions apply to both types of accounts. I may have to check at my end.
Perhaps I could buy you coffee/tea one of these days, to get an idea as to how the start of your options journey was like. Somehow relating it (to me) thru/via a one-to-one conversation may be more enthralling, in my view 😉
Incidentally, I am also one of those deeply “disillusioned” by the local stock market…at least for the last 25yrs.
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Wow…25 years is a long long time, but I guess there are people who would still choose to stay in the “safe haven” of the STI forever 🙂
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Hahaha. Actually, I left it behind 5-6 years ago. The pain was just unbearable.
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Btw Jason, have also joined your telegram group earlier this afternoon.
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oh great, welcome to the community 🙂
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