I had anticipated the Santa Claus rally to start on Thursday (16 Dec 21) but it turned out to be a day where many stocks sold off. I had initially set aside some capital just in case the market crashed after the Federal Reserve meeting on Wednesday, so the sell-off fitted this plan nicely. I was prepared to buy some more options contracts even if the market turned green on Thursday because I still believe that there will be a year-end rally. So, these are the LEAPS contracts that I bought on Thursday (16 Dec) and Friday (17 Dec).
I bought my first Adobe and Amazon dip as I believe these 2 companies have great fundamentals, consistently generate profits and will rise in price over the next few months. In the latest earnings announcement, Adobe has met expectations in terms of revenue growth and EPS but weak guidance made investors fear for a slowdown in sales and revenue over the next quarter. The stock price plunges more than 10% after the earnings announcement.
I bought Amazon OTM LEAPS because the premium price is attractive and I stand to 7x my returns if Amazon rises above the current share price of $3394. Amazon has been undervalued for most of this year and has dropped from its all-time high of $3773. So, there is still room to grow for this stock, which suits the LEAPS strategy.
The above purchase has brought my total spending on LEAPS in December 2021 to close to USD100,000. My previous buying the dip LEAPS purchases can be found in this article, and I also explain in that article why I keep buying the dip in December 2021 and my strategies for 2022.
Selling Apple LEAPS
With Apple’s uptrend being broken and its share price also dragged down by the selloff, I sold some of my Apple LEAPS that I bought earlier in September and November, to lock in the profits and to raise more capital to buy the dip. The returns that I get from Apple OTM LEAPS options are pretty insane. In less than 3 months, I have obtained returns ranging from 74% to 121%. That is the magnifying power of LEAPS and choosing a premium that gives an expected growth of 5 and above using the LEAPS Growth Formula, as shared in this article.
Moving Forward
As shared in my previous articles, I am still hopeful for a year-end Santa Claus rally. When it happens, I will be selling off my LEAPS that expire in 2022 and possibly channel some capital to doing the Wheel Strategy. 2022 may be a more uncertain year as free money is going to stop circulating in the economy soon, so stocks may not rise as fast as they did in 2021. The Wheel strategy will allow me to earn consistent monthly income while I await the LEAPS to mature and gain profits.
Related Articles:
Why I Bought USD76,000 Worth Of LEAPS In Dec & My Market Outlook For 2022
How Does LEAPS Works?
My Guiding Principles Of Buying LEAPS
How Does The WHEEL Strategy Works?
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Keen to learn about options trading but do not wish to pay for expensive courses, this newbie guide will help gain the knowledge and fundamentals to understand options better. And it’s totally free!
The Newbie’s Guide To Options Trading
The LEAPS Strategy has helped me make more than USD120,000 in 2021. Here’s all you need to know about this strategy that can help you increase your wealth exponentially:
The Ultimate LEAPS Options Thread
Looking for ideas on what stocks to invest in or which stocks to trade? You can take reference from what I have been buying or selling. I try to update them as soon as I can in this section, as well as share my thoughts behind executing these trades:
MY TRADES
Excited to start your trading journey or perhaps try out with a paper trading account to build your confidence in trading? Check out this step-by-step to help you get started:
How To Buy Options on Interactive Brokers (Step-By-Step)
I watched tons of videos on YouTube since 2020 and if you are wondering if there are any useful channels that you can subscribe to for learning market trends, TA, FA, check out this compilation here:
My Secret Weapons For Options Trading: I Watch These YouTube Financial Channels Every Day
I concluded my first year of options trading with more than USD160k of gain, see how I do it and the capital I use for every month to give you a sensing of the percentage yield I get out of my gains:
1st Year Options Trading Recap: The Journey Towards SGD$217,509 Profits In 2021
This blog is as authentic and as transparent as I can share, I do not just show the wins and hide the loss. I have made some very bad decisions in the first 8 years of investing and paid a huge price for them. Here is the loss I have accumulated during these years. I hope you learn some lessons from my mistakes.
I Cut $135,715 Worth Of Losses In The Last 1.5 Months
Learning Investment With Jason Cai 