This is an update to the post that I wrote previously in March 2022, on how I made SGD105k by trading Tesla in 7 months. I used the LEAPS strategy to generate very good returns in 2021 when the whole stock market was bullish and Tesla was rising to an all-time high. When things cooled down, I built enough capital to sell my first Tesla PUT at a strike price of USD1,200. That set the foundation for future trades using the Wheel Strategy.
Read more on the details of the trades in this post:
How I Made SGD105,543 (USD78,180) From Trading Tesla In The Last 7 Months (31 Aug 21 to 25 March 22)
A further 2 months have passed and my total profits from trading Tesla have now increased to SGD150k, which is a 50k increase in 2 months.
This means that the profits that I have collected from trading Tesla options now make up half of my total profits (SGD309k) gained from options trading in the past 15 months (I first started trading in late Feb 2021).
The below table shows an update to the profit/ loss table for Tesla trades happening after my last update.
For the month of April and May 2022, the market fell even lower and most of my Tesla trades revolved around selling and rolling covered call contracts, using the strategy explained in this article:
Why I Choose To Roll My CALL Option Contract When Share Price Falls
I also had my second Tesla PUT contract exercised at a strike price of USD970 on 24 May 2022. Thereafter, I owned 200 Tesla shares which I use for selling covered CALL contracts.
Selling PUT is a bullish bet while selling CALL is a bearish bet. You can see from my trades that as the market starts another round of dipping in early April, I switched my strategy from selling PUT to selling CALL and getting good returns as Tesla’s share price falls.
Concluding Thoughts
I was able to achieve 50k profits in 2 months, as compared to 100k profits in 7 months, even though 2021 has been a very bullish year, due to a couple of reasons. The first reason is that I have a larger capital base that was built up over the last few months. I have now invested 292k (SGD) capital in 200 units of Tesla shares (average buy price of USD1080). I was nowhere close to this capital in Aug 2021.
The second reason is that I am selling longer-dated CALL contracts (6 months to 1.5 years) on Tesla and getting more premium out of these contracts. However, this also means that if the share price increases, I will probably be unable to roll them anymore until the time value of the contract slowly runs out.
If the market turns bullish for the next half a year, I will have to live with the average annualised returns for these CALL contracts until they expire in 6 months to 1.5 years’ time, which means the total returns from selling CALL contracts are going to stagnate or slow down. That is the “worst-case scenario” for this strategy:
I Discovered A Way To Generate Higher Returns From Selling Covered CALL
However, if that happens and the market turns bullish, I will gain profit on my Tesla LEAPS CALL contracts that are expiring in Jan 2024. Therefore, I am able to benefit from the different market conditions, where it goes up or goes down.
As for the folks who are wondering what’s the point of selling covered CALL contracts and getting some premium when the share price of the stock is going down and losing value, I have explained in this article:
Q&A: Your Covered CALL Contracts Are Generating Good Returns But Your Shares Are Losing Money!
I hope this post is useful to you in some ways. Tesla is a good stock for options trading due to the price volatility, the higher the Implied Volatility (IV), the higher the premium gained for options contract sellers. However, a higher IV also means a higher risk of price fluctuation so do take note of this if you wish to trade options on Tesla.
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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 