The stock market rally came to an end mid way through August and started to trend down again, especially after Federal Reserves Chairman Jerome Powell’s speech at Jackson Hole. He emphasized that more pain would be coming ahead in the Fed’s fight against inflation.
I tracked my LEAPS Portfolio more closely during this month and realised that even at the height of the latest rally (from June 22 to Aug 22), coupled with me averaging in some positions in previous months, I was still down by 75%. The damaged done in the last 8 months of bear market simply destroyed my entire portfolio, through time decay, IV change and the drastic drop in share price.
I intially wanted to clear off my Jan 23 CALL options even though they are 90% down because I think they will become worthless even if the market rallies at year end due to by-election and Santa Claus rally. I thought that taking 10% back was better than none.
However, when I saw that the stock market sharply falling, I decided to cut loss on the positions that have slight smaller losses, i.e. around 40% loss to 70% loss, so that I can salvage back more capital. These include my positions in Twitter (exp Jan 23), Apple (exp. Sept 23) and Tesla (exp. Jan 2024).
Earnings decreased By SGD -67,315.05
It was the 2nd consecutive month that my total earnings dropped, by a massive amount. The last month (July 2022) was understandable as I took out my future gains from the premiums that I have collected from my sell CALL options contracts which are still open.
For this month, I closed out my LEAPS positions that still have around 30% to 50% of capital left. These are the P/L table of the trades that I made in the month of August.
I decided to sell out all of my Tesla LEAPS CALL positions even though they still have more than one year to go. This is because I sense that Tesla stock may go down together with the rest of the market and there are always opportunities to buy them back again when the rally, rather than risk them going down even further in the coming months if the market condition does not improve.
The total loss for closing (selling) these LEAPS positions added up to 70.8k.
I hope everyone is coping well, especially during these difficult times when you see your portfolio collapse. I personally have been trying to focus on the overall picture instead of the losses that I have made recently. I also took the opportunity to learn new techniques and strategies that I hope to be able to share with you in the future. Please take good care and be well.
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4 thoughts on “[Aug 22 Trading Review] Cutting Massive Losses For LEAPS Portfolio In Aug 2022”
Appreciate the sharing here and I believe that you will find opportunities ahead. Take care.
Thank you very much, my friend, wish you all the best in your investing journey as well 🙂
ok la bro. u made a killing last year. so even if we include the near term leap 100% loss, still can breakeven for the account.
Haha, that is my only consolation, I am just hoping the total earnings don’t turn negative by next year. And it is totally possible. As you see, my overall earnings are 224k now but my unrealized loss from the LEAPS portfolio alone is already 364k, so not enough to cover the unrealized loss.