After the relief rally which happened on 15th June 22 when Federal Reserves announced a 75 basis point interest hike, the stock market plunged again on 16th June 22 as fears of a deeper recession engulfed investors.
The S&P 500 fell by 3.25% to 3,666.77, its lowest level since Dec. 2020. It also erased gains after rising 1.5% on Wednesday. The Nasdaq Composite plunged by more than 4%, bringing the index down by more than 30% for the year to date. The Dow sank by 741 points, or 2.4%, to close below 30,000 for the first time since January 2021.
Buying More LEAPS PUT (Alphabet, Meta & Tesla)
I add more LEAPS PUT positions, mainly in Alphabet, Meta and Tesla as the plunge continued through the day. I added some LEAP PUT contracts on 14th June before the FOMC meeting and was tempted to add on more when the rally occurred on 15th June. However, I decided to wait till the rally is over before making my trades as buying PUT is a bearish bet, a market rise actually means we are losing money on the premium.
You can view more details of the trades I made below. The capital size of the LEAPS PUT portfolio is now 2.7% of the capital size of the LEAPS CALL portfolio. I intend to add on in the coming months to 10% to hedge against the losses from the LEAPS CALL portfolio.
Change My Mind On Buying Tesla PUT
I changed my mind regarding buying Tesla LEAPS PUT and initiated a contract with relatively small capital. In my previous article (Plan B of Saving my LEAPS Portfolio), I did mention that I am not buying Tesla PUT to hedge against the market crash because I am already doing so by rolling my covered CALL on my 200 Tesla shares.
However, I think there is a chance that Tesla’s share price may just keep going lower, especially with a less than ideal earning quarter coming up due to falling Bitcoin prices and the shutdown of Giga Shanghai factory. Therefore it is an opportunity to capitalise on the market trend to generate some returns from this downward trend.
Bye Bye Nio LEAPS CALL
My previous ITM LEAPS CALL contract that I bought in July 2021 is expiring worthless today, thus it will be the first group of options contracts to expire worthless in my LEAPS CALL portfolio. I started the contract ITM as Nio’s share price was higher than USD30 in July 2021 but the share price just keep plunging until it became OTM. The loss on this group of contracts was SGD$3,245 (USD2,404).
Concluding Thoughts
If 2022 is going to be the opposite of 2021, then we have to reverse the strategies used in 2021 to make money in 2022. In 2021, I used the LEAPS CALL strategy to earn more than 80% of my total returns in trading. However, I was too late to exit in 2022 and was down 90% on my 453k LEAPS CALL portfolio. If this year is going to be on a downtrend, then the LEAPS PUT strategy may just help to generate good returns. I am using the spare cash accumulated from making fewer trades in the past few weeks and those premiums generated from doing the Wheel strategy to fund and build up my new LEAPS PUT portfolio. Hopefully, it is not just a hedge and can help me generate good returns in 2022 as well.
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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 on 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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