top of page

New portfolio Update Journal #25

It has been a long I did not write here. In the last two months, I have gone through some of the view change on how to invest in stock market trading in general.

First, as the Nasdaq has been down about 10% in January, my portfolio was down significantly due to everything was on Tesla. As Tesla tanked nearly 50% from the all-time high, my portfolio also went down significantly. Then I was studying more and more about the option, and finally got the realization that I do not want to hold any single stock from this point on. The only reason I am holding stock would be tax issues. If the account is in a retirement account, there is no reason why you should hold stock at all.

That is the bold statement that I just made above, but I did what I believe in it. So, for my Roth IRA that I converted, I sold all of my stock position and now everything that I own is options only.

The reason I am going 100% on the option is if you use it well, it has much less risk compared to owning a stock. Simultaneously, it will similar chance of getting a return.

Let me give you one example that I did with the Tesla option.

  1. buy a leap option and do a cover call with it (Poor man's cover call)

I purchased the Tesla leap option for a $400 strike on July 21 @ 268.09 when the stock price was at around $660. Since it is deeply in the money, the time decay that I am paying is only $8.09 (400 + 268.09 - 660) for six months. At that time it had a delta of above 95. It means if the Tesla stock goes up by $1, my option price will go up by $0.95.

Conversely speaking, if the market were to crash, Tesla stock goes to $300 in the next month, since it is an option contract, it will still hold at least $50 for it. Whereas if I hold on to the stock, I would lose $360 per share vs in this example, I would lose $218.09.

The capital that I use to get 100 shares of Tesla @ $660 is $66,000.

The capital that I use to get 1 option contract for Tesla @ $400 is $26,809.

The impact of going up is similar but the downside is covered much better. If I am super bullish on Tesla, I can buy 2.5 contracts of Tesla. In that case, it will have much more to worry about, so I won't get into it.

When I cover the call I also sold $800 Tesla for June 21 @ $70ish. Since the market went down again below the $600 level. I bought it back @ around $9.

Since the Tesla bounces back up again, I sold the Tesla call option again with a premium of $24 @ $780.If it goes to 780, I am willing to close the trade.

Currently, I am selling RIOT as the primary strategy. Since the RIOT has high volatility, I think I can benefit from it. The weekly option for RIOT is around 10%. It is super volatile, yet, I do believe RIOT shouldn't be going bankrupt anytime soon. RIOT is the mining company for bitcoin. Since many companies are putting their money into bitcoin such as Tesla, Paypal, SQ, some of the Banks, etc. It has less likely to collapse like a few years ago. As long as Bitcoin holds its value, RIOT should be performing fine. So I am betting on its volatility for it.

Long story short here is my holdings for one of my account


Open Trade:

TSLA 1 Jul 21 $400 Call @ $292.5351 - buy

TSLA 1 May 21 $780 Cover Call @ $24.4447 - sell

PLTR 10 Jan 22 $20 Call @ $7.8551 - buy

PLTR 10 May 21 $26 Cover Call @ $1.1448 - sell

RIOT 10 Apr 1 $59 Put @ 9.0648 - sell

RIOT 2 Jan 22 $35 Calls @ $45.3552 - buy

======================================================================= #sellingPut#optiontrade#sellingput#putvertical#PutVertical#trading#stock#option ======================================================================= I am not a financial advisor. Any trades listed are my own personal trades and meant for educational purposes only. Option trading bears high risk and high return strategy for trader.

6 views0 comments

Recent Posts

See All
bottom of page