[3 Feb Trades] As Market Falls, I Continue To Sell Covered Call, OTM Call This Time Round

The market fell on 3 Feb 22, dragged down by poor performance by Meta Platforms (Facebook). The growth stocks that I owned (Nio, Palantir, Pinterest) continued their downtrend from the day before (2 Feb 22). In a falling bearish market, my strategy is to sell covered calls to earn some premium. So, I open up the below positions over 2 Feb and 3 Feb, with an expiration date on 4th Feb22.

Name of StockAverage Price (USD)Strike Price (USD)Current Share Price
Premium Collected (USD)Returns (%)
Palantir21.781412.4514 x 13 = 1820.59

The returns are much lower than my previous covered call contracts, not only due to the shorter expiration date of 2 days (4 Feb 22), but also I sold OTM call contracts instead of ATM call contracts. This is to lower the risk of a price spike and I have to frantically buy back the contracts at a loss to prevent them from being exercised.

I am selling at a price that I feel will not (or low chance) be reached by the expiration date. If the share prices of yesterday’s closing remain on 4th Feb or close lower, I do not need to sell away my existing shares.

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

Follow me on your favorite social media platforms, Facebook, LinkedIn, or Twitter, to get notified of my latest blog posts. Or join our investing/ trading community at Telegram to exchange ideas or ask questions relating to investing/ trading.


2 thoughts on “[3 Feb Trades] As Market Falls, I Continue To Sell Covered Call, OTM Call This Time Round

  1. Nice to stumbled across your blog!

    I noticed that your Nio average price is pretty high.

    Didn’t you took the opportunity to average down at the recent lows when it hits USD 19+? 😅

    I sold 2 lots of Nio PUT options recently expiring on Feb 18 with a strike price of 20 but unfortunately it is OTM as the price is rising again…

    I wanted to double down my position at an even lower price below 20 but it seems like I’m not successful now…

    I’m now strategizing if i should buy to close and lock in my profit and then open a new position for an even lower strike price at a later expiry date.

    But the premium isn’t attractive if i sell new puts at strike price of 20 or lower…

    I might revisit it again if the share price drop again to take advantage of the jump in premium…


    1. Hi R, thanks for dropping by! Yup, I sold PUT on Nio sometime back last year when prices are still very high. I did not average down as I do not wish to increase my portfolio allocation to growth stocks. Everything is looking attractive now and considering the macroeconomic environment whereby growth stocks could be hit hardest, I choose to trade/ invest on the mega caps for now. And I still have so many stocks that I want to buy but cash is very low currently, after buying the dip in Dec and Jan 🙂 You may want to sell ITM PUT for a higher premium and also increase your chances of getting the Nio shares.


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s