After a massive selloff on 13 Jan 22, the market opened in the green on 14 Jan, which is surprising as the premarket was red. Bank of America (BAC) was down close to 2% following the mixed results from big banks and I took the opportunity to sell a PUT on BAC shares, with a strike price of $50, an expiration date of 18 Feb 22 (35 days) and collected a premium of $275 (5.5%).
I also took the opportunity to load up 3 x Netflix LEAPS (strike price: $1,325, expiration date: 19 Jan 24, premium: $525, expected growth: 5.45) to average down the LEAPS I bought previously. Netflix’s share price has taken a hit over the last 2 months, falling from its all-time high of nearly $700 in mid-November 2021 to its current share price of $515. I still believe in the future of Netflix as it is not just a movie streaming platform but also a movie studio that can produce blockbuster movies and series, such as Squid Game, Money Heist, Red Notice.
As the share prices of my covered call stock positions continue to fall, it is a good thing for the options seller (me) as the premium will drop and I can buy the contract back at a lower price to close it. I close my covered call positions in Palantir and Pinterest to lock in profits and earn $400 in 2 days while the stocks are falling!
I open new covered call positions in these 2 stocks to collect new premiums for next week. So, if the share prices stay sideways or go down, I will be collecting these premiums without having to sell away my existing shares. Otherwise, I will close the contracts and suffer a small loss (depending on how much the share price rises) before they expire next week. This is one way how we can continue to earn some returns in a bearish market.
I hope this sharing has been useful and I wish you all a happy weekend ahead.
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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 
Hi Jason,
I see you sell PUT ITM rather than OTM, is this better strategy and internet of reward?
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Hi Eddie, I am selling ITM PUT as I am bullish on the stock going higher as this is a year of interest hike so bank/ financial stocks will benefit from the higher interest rates that they dish out. Also, ITM PUT gives me a higher return as I lock in future gains into the premium.
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Hi. I think u got the terms mixed but no biggie as long as it works. Itm put means the share price is below the strike price. It’s the same whether it’s buy or sell. Itm puts have a greater chance of being exercised before expiration and seller will be assigned at maturity. But since you are bullish, I guess it’s still ok as u are expecting the option to expire Otm. In the meantime, you will be collecting more premiums. Also the 5.5% is actually 57.3% annualized. Cheers. Raymond.
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Hi Raymond, oh ya, you are right, I am selling ITM when I am bullish that it will go higher and OTM when I think it will go lower.
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