Tesla has been one of my Top 3 best performers in 2021, alongside Nvidia and Alphabet (Google).
However, in 2022, I have barely earned any returns from Alphabet as I am only holding LEAPS contracts and they are in the red due to a huge correction for tech stocks. I managed to generate some returns on Nvidia through selling PUT and CALL options contracts.
Tesla continues to be my top performer in 2022, even when the stock is going through a huge correction. So, in this article, I wish to share how I am profiting from trading options on Tesla in different market conditions.
Bullish (2021)
In 2021, where it was a fantastic bull market and every dip was short-lived, I used the powerful LEAPS strategy to buy OTM CALL and sell them for massive profits, even without having a huge capital of own 100 Tesla shares.
As you can see from the profit table above, in just 11 contracts (including one that resulted in a loss), I have managed to earn SGD62,68k (USD46.43k). This is all thanks to Tesla’s phenomenal run to an all-time high of USD1,243 sometime in Nov 2021.
Some of the trade details of these LEAPS contracts can be found in these posts:
Total Profits From Trading Tesla In Last 3 Months: USD$48,740
Thank You Tesla & Elon Musk For The 470% Profits
The Power Of LEAPS: Tesla LEAPS Is Up 340% In Just 18 Days
Bearish & Volatile (2022)
By end of the year (Nov/ Dec 21), I have accumulated enough capital to sell a cash-secured PUT contract on Tesla because I think the 100 shares that I will own if the contract is exercised, will act as a good long term investment for this company.
I roll my Tesla PUT contracts a few times as the share price was rising in anticipation of a good Q4 result, which Tesla later totally smashed the delivery numbers and the share price spiked up the following.
However, the stock started to fall following that euphoria and it just kept falling for the next couple of months, to the low of USD766
During this period, I started selling and rolling covered CALL contracts to generate returns from the downtrend. The trade details can be found in this post:
How I Made USD5446 This Month By Trading Tesla Stock (Not By Shorting Or Buying PUT)
Finally, in March 2022, leading up to the FOMC meeting where the Fed announced an interest rate hike, I prepared for a potential rally by closing my covered call contracts and waiting on the sidelines. I also accumulated new capital through selling my SG bank shares to sell another OTM PUT contract on Tesla. As the rally in March continues, I keep selling and rolling my PUT contracts on Tesla to earn more income.
More about the strategy is explained here:
Why I Choose To Roll My PUT Option Contract When Share Price Rises
Details of the trades can also be found here:
A Better Strategy Than LEAPS CALL In A Market Rally?
Lastly, I sold a covered call contract on my 100 Tesla shares at a strike price of USD1,200 and collected a premium of USD2,000 (2.5%) returns. The reason is, the strike price of USD1.2k is the strike price of my previous PUT contract when it was exercised, which meant that I paid USD1.2k for each Tesla share in that contract. Therefore, if this current CALL contract gets exercised, I am basically selling away at 1.2k each with no loss. All the premiums that I collected from then to now form my profits. Also, I think Tesla has gone up quite a fair bit and the room to further rise beyond 1.2k is smaller now. If Tesla closes below 1.2k on the expiration date, I will still keep my shares and the 2k premium that I have collected.
I hope this sharing has been useful and I wish you all the best in your investing/ trading journey.
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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
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?
Also, check out my trading strategies in different market conditions, whether it is bullish, bearish or volatile:
How Not To Lose Money In Trading? | My Trading Strategies For Bullish, Bearish And Volatile Market
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
Want to learn more about Technical Analysis (TA) but find it difficult to grasp the concepts? This article brings you TA at a glance, and helps you understand key terminologies, indicators, and techniques used in TA to equip you with the knowledge that can empower you in your investing/ trading journey.
The Newbie Guide To Technical Analysis (TA)
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)
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Learning Investment With Jason Cai 