The stock market rallied strongly in the month of July, S&P 500 was up 8.10% while the tech-heavy Nasdaq was up almost 12%. My portfolio unrealized loss also dropped from the record 648k to 573k.
Despite the negative news of record high 9.1% CPI data, Federal Reserves increasing the interest rate by 75 basis points and US economy going into recession, the market seems to be anticipating that inflation has peaked and that the Federal Reserves will U-turn on its monetary policy to save the economy.
For my Wheel Strategy portfolio, I tried to close as many (profitable) positions as I can at the start of the rally, to lock in the profits.
I then opened up (sold) new covered CALL contracts to hedge against any bullish traps/ bear market rebound. Selling covered CALL is a bearish bet so as the market rallies, I left the contracts on their own as most of them are long-term contracts, so there is no urgency (& stress) to close them or get exercised when they reach expiration.
I sold off my LEAPS PUT portfolio and suffered a loss of USD1k. That was quite a good cut-loss move as my loss would become greater if I have left the portfolio as it is until the end of July.
I then shift the capital to buy more LEAPS CALLS instead to capitalise on the rally, with the end goal of saving my 472k LEAPS CALL portfolio.
Earnings decreased By SGD -33,268.15
For the first time in 18 months, the change in my total earnings turned negative by -33.268k. The reason for this huge drop is that I have decided to exclude the premium I have collected for my open CALL options contracts.
I included them previously because I have already collected the premium, so I think they should be part of the profit. However, as the contract is yet to close, there is still a chance that this premium may change as there are a few scenarios that can play out while the contract is still open.
If I include these premiums as part of the tabulation like previous months, then the net gain for July would be $34,387.20 – $33,268,15 = $1,119.05
It was not as much as the previous months as the Wheel Strategy portfolio did not bring in much income this month due to the rally and I had to cut a USD1k loss by selling off my LEAPS PUT portfolio.
I am hoping the rally will continue to August and beyond and that I will have a chance to sell off my LEAPS CALL at a minimal loss. My current strategy is to buy more LEAPS CALL whenever I can find capital so that I average down my previous positions to stand a higher chance of breaking even or minimizing losses.
I hope this sharing is useful to you and I hope you have a wonderful month in investing or trading. All the best!
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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 sense 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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