I'm addicted to free money.
NIO can't always go up all the time. Many stocks have performed their gravity-defying stunt. Maybe, they will come back to Earth sometime.
This month, I take my first step to start trading options, after listening to podcast, watching youtube videos and reading the two options bible: Options as a Strategic Investment by Lawrence G. McMillan, and Option volatility and pricing strategies by Sheldon Natenberg.
I am prepared to lose a margin of my money. You know the drill, we have to pay tuition fee, be it in mahjong, investment, or general speculation. Well, I guess, Mr Market is kind to me in one way.
Multiples of my bull put spread are profitable. When it comes to my options positions, so far, only one iron condor on UAL is unprofitable, out of eleven. That's a win rate of 90%. It is almost with certainty that the percentage will drop as I start to make more trades.
As you can see from the diagram above, out of the profit of USD510, USD115 is from owning ten shares of Alibaba. In a purely options trade, I will have generated a profit of USD395.
A little over 10% of my initial capital of USD3081.23.
Though, Mr Market is not always benevolent to me. My ATVI shares are still hovering at a loss of about 200SGD. And of course, my dollar-cost-averaging STI-ETF, which still requires a 6% move for it to break even. I have some other positions that make it profitable for me this year.
Just like I have been scorched by the crash following the hyper bull run in crypto, I am sceptical about the current bull run in the market. While I have my assumptions, I don't fully trust myself on that. Well, talk about trust issues.
In the next few trades, I might move in favour of selling iron condors, depending on the implied volatility and trade volume. Part of it because of less margin requirement and the risk exposure.
I am lucky to get away with no real misses. Any drastic downturn could cause a max loss of 800, almost 20% of my capital. As much as possible, I will like to not stand in a directional assumption, unless the market is trending like it is right now. Then, I see no reason in fighting the bulls.
Still, this weekend, I want to spend some time, deep-diving into more volatility play in options. The target for next month will be 3% growth on the capital of USD3560, which is $100. Playing it safe.
I'm also planning to inject more capital around mid-January. The plan is to liquidate my ATVI, STI-ETF and my crypto positions. Closed my Standard Chartered bank account that I used to trade before I manage to open my TDAmeritrade account. It serves no purpose now, with their high commission fee and it locks up my cash in the saving account.
Now, I feel like I'm adulting. That's all for now, till the next portfolio update.
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