The stock market rallied on 21 June 22 with Tesla leading the way. At one stage, its share price increased more than 12% but it eventually closed with a 9.35% increase. The tech stocks and tech stocks were among the best performers.
Why I Bought More PUT Contracts (Alphabet, Meta & Tesla)
I bought the following PUT contracts on Alphabet, Meta and Tesla and the contract details are below. Buying a PUT contract is a bearish bet, so why do I buy more PUT contracts when the market is rebounding?
I believe that any rally now, no matter how many days/ weeks it lasts, is short-lived and not likely to be a signal of the market bottoming and the start of a new bull run. The only market bottoming will happen when inflation is under control and there are more than 3 consecutive months of decline in CPI data to prove inflation has peaked and is declining.
I can wait a few days until the rally has ended before buying the PUT contracts to get the premium at a lower price (when the share price increases, the premium drops because the share price moves even further above the strike price) but I thought I may just invest a small capital for now and add on more PUT contracts if the share prices of these companies continue to go up. I think when the stock market rallies to such magnitude in a bear market, it could be a bull trap and share prices could start to come down soon.
More Downside For Meta Shares
When the whole tech sector rallied but Meta (Facebook) was in the red, I worried for the future of this company, especially when I have a bunch of Meta CALL options contracts expiring in Sep 2022. That is why I increased my capital on Meta PUT contracts and bought 4 LEAPS PUT contracts expiring in June 2023, to claw back some capital when the CALL options expire worthless in Sep 2022.
The below table is a summary of the capital allocation for my LEAPS PUT portfolio:
My target is to get to the 45k mark which is 10% of my LEAPS CALL portfolio, to act as a hedge, should the market continues to crash in 2023 if the US economy goes into recession or the great depression.
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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:
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:
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Also, check out my trading strategies in different market conditions, whether it is bullish, bearish or volatile:
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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:
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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.
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