[24 March 23 Trade] Sold A CSP On Nvidia, SP $200, Expiration Date 19 Jan 24, Premium $1745 (8.75% Return)

It has been a while since I last sold a Cash Secured PUT (CSP). The main reason is because CSP is capital intensive since I need to set aside the capital to buy 100 shares of a particular if the contract gets exercised.

I have been using the cheaper version of Vertical Spreads, e.g. Bull PUT Spread, with a much lower capital to profit from the bullish momentum. However, the downside of Vertical Spreads is that there is less downside protection in the event you get it wrong on the direction. You have to cut loss or risk losing the max loss for the contract.

2023 has been a total disaster for me, mainly due to the high volatility of the stock market. I am on a losing streak and most of my bets have gone wrong. While I have kept the max loss of each contract to a small percentage and an amount that I can absorb, the accumulated losses from many contracts add up to quite a substantial amount eventually. It was demoralizing when you keep losing. I also did crazy things on impulse to try to claw back some losses, only to lose more money while doing so.

After all these losses and painful experiences, I decided to go back to basis of safe options trading and give myself a safety net, even when I chose the wrong direction. I wrote an article previously to explain this strategy and may possibly be using this strategy for a peace of mind, save myself time and effort to keep monitoring and most importantly, to prevent further losses:
How You Can Possibly Not Lose Money In Options Trading?

Why Nvidia For CSP Contract?

To recap, selling CSP is a bullish bet. The options seller wants the share price to close above strike price during expiration so the contract will expire worthless and he can take the premium without having to use up his reserved capital to buy 100 shares.

Nvidia’s share price has more than doubled for the last 3 months. It has risen from the lows of end 2022 where the company is slashing product prices due to weakening demand on chips and graphics cards to beating earnings expectations (Feb 2023) and currently being at the center of the AI revolution,

Despite the phenomenal rise and close to its 52 week high price, I think there is still room for growth and possibly hitting all-time-high for Nvidia, with a series of exciting projects in progress, Nvidia has announced that it would be partnering with Microsoft to build a “massive cloud AI supercomputer”. This supercomputer could then be used by enterprises that are using Microsoft Azure. Nvidia has also partnered with Oracle and Google to provide AI-as-a-service on their respective cloud platforms for enterprise customers.

Why I Chose This Strike Price (USD200) And Expiration date (19 Jan 24)?

I chose this strike price and expiration date because I have 3 Covered CALL contracts expiring on the same day with the same strike price. I see selling Covered CALL as being bearish, as the fall in share price translate to a lower premium so I can buy to close with a profit. In a way, I have covered both scenarios of how Nvidia may play out by 19th Jan 2024.

If Nvidia falls below USD200 on 19th Jan 24, I will collect full premium of my 3 Covered CALL Contracts as they expire worthless.

If Nvidia closes above USD200 on 19th Jan 24, my sell PUT contract expires worthless and I collect the full premium (USD1,745 ~ 8.75% return on capital) from this contract, without requiring to buy 100 shares of Nvidia. I also free up the capital that is reserved for this CSP contract. For my Covered CALL contracts, I will probably roll them to a later date to earn more time premium.

What If I Am Wrong?

If I am wrong and Nvidia’s share price starts to fall in the coming months, all the way to 19 Jan 24, there are a few scenarios that can play out.

In the first scenario, I give myself a buffer of USD67.79 for the share price to fall before it expires in the money, which means Nvidia can keep falling from the current price of USD267.79 all the way to USD200.01 (33.8% decline) on expiration date (19 Jan 24) and I will still keep the full premium and free up my capital without having to buy 100 shares of Nvidia.

If Nvidia goes on a free fall to less than USD200 by 19 Jan 24, I will either let the contract get exercised and buy 100 shares of Nvidia at USD200 each (total USD20k) or roll the contract to a later date, to earn more time premium and allow the share price to rise above USD200 eventually. I think given time, Nvidia’s share price will definitely rise above USD200.

Concluding Thoughts

This method of selling CSP may be capital intensive but it provides downside in the event where things do not turn out the way I have expected. If Nvidia turns out the way I have expected, I may close the contract way earlier than 19 Jan 24, to lock in my profits. If Nvidia’s share price stays stagnant all the way, or drop slightly (10 ~ 30 %), I am still able to capture the 8.75% profit and free up my capital for other trades. It may not give the best returns in the shortest time but it gives me the margin for error if I get it wrong eventually. I think that downside protection is very important in 2023 because we really don’t know whether the market is going to crash or shoot to the moon and creates the next bull market.

<< Subscribe to my blog to have all these articles delivered directly to your email address >>

*** FREE MONEY ***

Sign up for WeBull Securities Brokerage and fund any amount to receive up to USD500 in share value (Apple, Tesla, Microsoft, Google)
Receive Free Money (USD30~USD500) When You Sign Up With WeBull Securities Platform (Fund ANY Amount)

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

After accumulating more than 600k of unrealized losses on my portfolio, I wrote this article to encourage friends and investors who are also losing a lot of money to the market.
If You Are Feeling Depressed From Losing Lots Of Money In The Stock Market, Here’s An Article For You

In the 10 years of my investing journey, I have made many mistakes but also learned many lessons from these mistakes. I compiled the 10 most valuable lessons that I have learned and may they help you succeed in your investing journey.
Happy 10 Years Of Investing | 348k (Realised) Profit, 635k (Unrealized) Loss & 10 Lessons Learnt

The precious 6 lessons I learnt after cutting more than half a million of losses in the stock market through bad investments and risky trades.
6 Lessons Learnt After Losing 551k In 10 Years Of Investing & Options Trading | What Newbies Should Know They Start Investing/ Trading

How I managed to build a 1M investment/ trading portfolio despite coming from humble beginnings.
How A Poor Kid Got To A 1M Investment Portfolio | Tips & Principles Of Building Wealth

I did these 10 side hustles while holding a full-time job, so I share them here so you can be inspired to grow your wealth through a side hustle that you enjoy.
I Did These 10 Side Hustles While Working Full Time | 10 Side Hustle Ideas To Help You Earn An Extra Income

Struggling with inflation and high cost of living? Try these 10 methods to help you save money and accumulate more savings for investments or rainy days.
10 Ways To Save Money To Help You Fight Inflation & Rising Costs Of Living

Why I am building $120,000 of cash reserves in Singapore Savings Bonds (SSB) & 5 reasons why I think SSB is a worthy low or zero risk investment that you can consider.
Why I Am Building $120,000 Of Cash Reserves In Singapore Savings Bonds (SSB)? | 5 Reasons Why SSB Is A Worthy Low Risk Investment

Sharing why I am doing Dollar Cost Average (DCA) into SPY and QQQ ETF for long term investments and a step-by-step guide to doing it automatically with Interactive Brokers.
Why I Am Doing DCA (Automatically) For SPY & QQQ For My Long Term Investment? (20% ~ 30% Upside Potential) | Step By Step Guide To Activating Automatic Recurring Investment On IBKR


If earning more money from your investment does not excite you anymore, you may be seeking a purpose that brings fulfillment and meaning in life. I have written a motivational book that may be useful to you in some ways. You can also download a free copy here:


Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s