The market started with another huge sell-off on the first day of the week (20 Dec) leading up to Christmas, but on Tuesday and Wednesday (21 & 22 Dec), we are finally showing signs of a Santa Claus rally.
These are the trades (captured from my trade logs) that I made this week and I will share my thoughts in a while. Do note that the time stated in the screenshot is Singapore time, which is 12 hours ahead of US time.
When the market was selling off on Monday (20 Dec), I sold off 10 Apple LEAPS to lock in the profits that I made over the past few weeks, just in case the market continues to sell off until next year, which would have turned my LEAPS from green to red.
On Tuesday (21 Dec) when the market was rebounding after another red opening, I took the opportunity to buy 6 Apple LEAPS and 1 Tesla LEAPS (the cheapest TSLA LEAPS option for Jan 2023). That brought the average price of my 5 TSLA LEAPS expiring Jan 2023 to $36.52. At yesterday’s close where Tesla’s share price shot up 7%, the last transacted price was $44.80, which means I have an unrealized gain of $828 per LEAPS contract. I have been buying the dip for the whole of December and you can read more about my thoughts in this article.
Apple PUT Contract
On Wednesday (22 Dec), I decided to invest another USD18.5k to sell an Apple PUT contract and collect a premium of $1325 (7.16%). The reason for selling an OTM PUT @ $185 strike price is because I believe that Apple’s share price will continue to grow in the coming weeks and I am locking in future gains. The ATM PUT options will yield around 4% but that is the maximum return even if Apple’s share price continues to rise.
The other reason for selling a PUT option is because I am interested to own the stock at its current price as I believe Apple will continue to be a dominant player in years to come. Apple has revolutionized our world with the invention of the smartphone, it has regained its position as the most valuable company in the world, its products are of premium quality and 99% made of recycled material and most importantly, they have a very loyal following, which means their products will always in demand, despite being more expensive than their competitors. I remember my first ever trade was to sell a PUT option on Apple at a strike price of $126 in late Feb 2021. 10 months later, the share price has increased by almost 50%.
Strategy for 2022
The selling of the PUT option is also aligned with my strategy for 2022 (that I mentioned in this article), which is to cut my LEAPS allocation and move the funds to do the Wheel strategy. This will allow me to continue to own Apple stock for the long term and earn some income selling monthly covered calls on it. I predict that the market in 2022 will not enjoy as high growth as it does in 2020 and 2021 and it may stay sideways for long periods. This is because of the monetary tightening aka closing the tap on free money printing. Thus, investors will become more prudent as there is less money to flow around in the stock market. If the market stays sideways or even goes downwards, the Wheel strategy will give us better returns as compared to LEAPS. Read more about the pros and cons of each strategy here.
I hope this sharing has been useful to you and I wish you and your loved ones a joyous festive season ahead. Take good care and have a really wonderful Christmas Day and New Year’s Day celebration.
Why I Bought USD76,000 Worth Of LEAPS In Dec & My Market Outlook For 2022
How Does LEAPS Works And How I Use LEAPS To Maximise Gains?
[16 & 17 Dec 21 Trades] Sold AAPL LEAPS, Bought Adobe & Amazon LEAPS for The First Time
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:
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