[21 Jan Trades] Making Money Through Rolling Covered Calls As Market Falls

On 21 Jan 22, the stock market continued to fall and there seem no signs of recovery in sight. The silver lining is that share price dropping is good news for CALL options sellers as the premium drops with the share price. I closed my covered call positions that I started just 2 days ago on 19 Jan 22 and here are the profits that I have secured (see bold brackets in the table below).

Name of StockStrike Price (USD)Premium Collected (USD)Returns (%)
Nio29130 —–> (62)2,85 (1.35)
Palantir1514 x 49 = 686 —-> (378)2.27 (1.25)

I also close my Pinterest covered call position that I sold on 14 Jan 22 as the expiry date was 21 Jan 22, thus securing the profits below

Name of StockStrike Price (USD)Premium Collected (USD)Returns (%)
Pinterest3372 —–> (69)1.11 (1.06)

I then open up new weekly covered call positions for these 3 stocks, expiring next Friday (28 Jan 22), and collected a total premium of USD1k. The returns for the 7 day-contract are as follow:

Name of StockStrike Price (USD)Premium Collected (USD)Returns (%)
Palantir1414 x 55 = 770 2.66

If the share prices of these 3 stocks remain the same (at this time of writing) or fall even lower at the expiration date, I will not be obliged to sell any of my shares.

If the share price continues to fall lower before the expiration date, I will keep repeating this process of closing the positions and opening up new positions with a longer expiration date or a lower strike price.

This strategy helps me to keep generating returns when the share prices are falling and helps to reduce the average (breakeven) prices of the stocks that I own. The risk of this strategy is covered in my previous article and you can read more about it here:
How I Do Earn Even When The Stock Market Is Bearish?

In the month of January 2022, the returns I made from selling covered calls are USD2.27k, not including USD1k from the 3 contracts that are still open. I also lost USD276 trying to buy back the CALL contracts when the prices spike up at certain stages. The total capital used to achieve this is USD39.6k, which comprises 100 Nio, 100 Pinterest and 1400 Palantir shares.

If the continual market correction is making you feel depressed, do take some time out to relax and recharge. Life is more than just accumulating wealth as there are more important things in life to pursue. If we strip ourselves off the material things that we own, we are all flesh and blood yearning for love and support from the people we love most. So, take good care of your mental and physical health so that you can last the long run.

P.S. If you are feeling stressed, here’s a therapeutic rain video to help you relax:

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)

If the bear market in 2022 is making feel depressed as your stocks come tumbling down, read this article to find out how you can use options trading to help you claw back some of your losses as you await market recovery:
How I Do Earn Even When The Stock Market Is Bearish?

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

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2 thoughts on “[21 Jan Trades] Making Money Through Rolling Covered Calls As Market Falls

  1. Hi Jason. Your covered call on PLTR is all covered or semi-covered? Cos I noticed u short 55 call contracts meaning you probably have 5500 shares but you also mentioned you used just 1400 PLTR shares to achieve the results. just a clarification. cheers. Raymond.


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