[19, 21, 22 April 22 Trades] My Current LEAPS And Wheel Strategies

It was not a great week for the stock market as the S&P 500 closed lower than it started on Monday, 18th April. Netflix’s dismal quarter brought down the market on Wednesday and while Tesla’s phenomenal quarter brought some hope on Thursday, it was quickly dashed by Federal Reserves Chairman Jerome Powell giving a strong hint that the Fed is planning to hike 50 basis points (0.5%) of interest rates in May 2022.

Selling Long-Dated Covered CALL Contracts

I started the week by first closing all the previous CALL contracts that I have sold and then trying out a new strategy of selling longer-dated CALL options on 3 of my stocks, Tesla, Nvidia and Palantir. These 3 stocks made up close to 88% of my total invested capital in shares that I use for options trading (selling covered CALL options).

More details of the covered CALL trades can be found in this article:
[18 April 22 Trades] Trying The New Strategy Of Selling Longer Dated CALL Covered Contract

I adopted a wait-and-see approach for the rest of my stocks, Nio, Pinterest and AMD as I could not find a strike price that I am comfortable letting go of, even with selling a long-dated CALL option contract.

However, at the end of the week, I did sell the remaining positions on covered CALL as the market was going down and it makes sense to earn some premium off selling covered CALL. More trade details are below:

Rolling Cash Secured PUT Options

Tesla’s great earning results on 20 April and the spike in share price on the following day, gave me the opportunity to roll the Cash-Secured PUT contract that I sold previously. I closed the first contract for a profit of USD1,350 (17 days). I sold a new PUT contract at a lower Strike Price of USD970, with a later expiration date on 27 May 22 and collected almost the same amount of premium as the previous contract.

I wrote a previous article on rolling PUT contracts as the share price rises. You may find this read useful:
Why I Choose To Roll My PUT Option Contract When Share Price Rises

Buying More LEAPS CALL/ CALL Option Contracts

This week, I bought more LEAPS CALL option contracts on the various stocks that I have bought LEAP CALL on previously. The main reason is that the premiums of the existing contracts have dropped significantly and that was an opportunity to average down on these positions.

Details of the CALL option trades made this week are as follows:

When I halved or more than halved the average price on these positions, it gave me a higher chance to break even or to incur a lower loss when I exited these positions provided there is a rally and share prices rebound in the future.

However, if the share prices remain at the same price that I bought or drop lower, then I will lose the extra capital that I use to average down on the LEAPS positions, which equates to a bigger loss.

Below is a summary table of the number of LEAPS contracts that I have for each company, the funds allocated and their expiration dates.

My priority would be to clear those positions that are in the orange box as they are expiring soonest in the coming months. After which, I will be waiting for opportunities to sell away the positions that are expiring in Jan 2023.

I bought many of these LEAPS positions in Dec 2021 when there was a dip in the market but the share prices were still high. Without averaging down, it would be almost impossible to break even on these contracts as the share prices are unlikely to go back to their peak levels in Nov 2021.

It is a humbling experience knowing that whatever works so well for me in 2021, such as the LEAPS strategy, kind of fail miserably in 2022 with all the uncertainties arising from interest rate hikes, Fed’s quantitative tightening policy, inflation, and the war in Ukraine.

It is extremely difficult to predict what lies ahead, so what I can do is to be prepared for all outcomes: market rally (sell PUT, buy CALL), market stagnant (sell CALL), share price volatility (sell PUT & CALL) and market crash (sell CALL).

As I progress in this trading journey, I learn and fine-tune my strategies to achieve my goal of creating a substantial and sustainable sideline income every month that can help me achieve financial freedom.

***
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)

Follow me on your favorite social media platforms, FacebookLinkedIn, 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.

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