My options trading journey started on 26 Feb 2021 and I remembered that my options trade was to sell a PUT on Apple at a strike price of $126.
In the fantastic bull run in 2021, I also used the LEAPS strategy to make massive gains. However, my LEAPS Portfolio crashed spectacularly in 2022 as I lost most of the invested capital.
In 2022, I also tried to use Vertical Spreads as part of my options trading strategies.
In this article, I want to share how much profit (or losses) each strategy brings and which one works best for me (earns me the most money).
As my investing journey started from 16 July 2012, I have conveniently defined one full investing year to be from 16 July onwards to the 15 July of the following year. Thus, my year 1 options trading journey started on 26 Feb 21 and ended on 15 July 21.
In Year 1 of my options trading (26 Feb 21 to 15 July 21), the Wheel strategy of selling Cash Secured PUT and Covered CALL helped me earn SGD$8,522.55:
While the LEAPS Strategy helped me earned S$2,949.75:
In Year 2 of my options trading journey (16 July 21 to 15 July 22), the Wheel Strategy helped me earn S$112,769.50:
While I earned S$167,497.20 from the LEAPS Strategy:
In Year 3 of my options trading journey (16 July 22 till date), the Wheel Strategy helped me earned S$34,358.45.
My Vertical Spread portfolio earned me S$64,693.43:
While my LEAPS Portfolio brings a massive loss of -$423,944.12:
To sum it up, the is a table of all the earnings & losses for the various strategies & portfolios for the respective years:
The Wheel Strategy was a winner in Year 1 when I first got started.
In Year 2, the LEAPS Strategy was a clear winner thanks to the wonderful bull run of 2022. The Wheel Strategy is behind by around 55k.
In Year 3, I gave up all my gains after cutting massive loss in the LEAPS Portfolio. Also, in year 3 (which has yet to be concluded), the Vertical Spread portfolio is leading at the moment. However, there is still a chance for the Wheel portfolio to catch up as I have a large unrealized loss in my Vertical Spread portfolio, due to a disastrous start to 2023.
In total, the Wheel Strategy has helped me earned S$155.65k while the Vertical Spreads brought in S$64,693.43 while I lost $253k in LEAPS Portfolio.
For the capital that I used to do Wheel, you can refer to my portfolio reveal post that I shared previously:
Revealing My Entire 609k Portfolio | Stocks, Options, Bonds | Funds Allocations & Investment Plan for 2023
Concluding Thoughts
I had once thought the Wheel Strategy was too capital intensive (selling Cash Secured PUT) and the returns were too low for my liking, as compared to the massive gains made from LEAPS Strategy. However, it turns out that the Wheel Strategy is my slow and steady winning tortise that has weathered the storm and volatility of the bear market, while the previous high flyer, LEAPS, crashed miserably.
I hope you learn something useful from my experience and avoid the pitfalls of options trading. The instant and high rewards game plan often comes with a higher risk than the good old boring strategies, so choose wisely and always be prepared for the worst case scenario.
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