To The Moon

On some days, we wake up on the wrong side of bed, then the markets move on the wrong side of movement, which leads to skipping of daily routines such as morning coffee.

We know how the story will go on then.

Early morning, Alibaba gives a good morning surprise by dropping again.

Nothing too off about it, baba investors should be used to it already. 

Decided to just do the usual drill, drop in baba, check Volatily cos usually with plunge there will be volatility increase.

Check if any option position that is due for adjustment. 

Have 4 baba short Jan 75 put options which is left with lesser than 21 days. around 15% in the money, right candidate to take action.

Decide on overall baba position. I remain bullish on baba, rationale being baba remains profitable, and also despite China gdp not doing so well, it's still >5%. Western media can get disgusting at times. USA gdp for 2023 is not even 3% and can talk until the economy is doing well, meanwhile China gdp is almost double of it, and western media paints it as sky is falling. Granted I do not like how China media likes to adjust their narratives and figures, but western media biased narrative can be even worse. True that there is increased competition in the form of $Pinduoduo Inc.(PDD)$ , however my viewpoint is that baba is still severely undervalued. 

I believe in being contrarian, be greedy when others are fearful and be fearful when others are greedy. This strategy needs lots of patience and determination though. 

Ok back to strategy selection. I remain bullish on baba, and my plan is to increase bullish positioning while limiting my risk.

Looking at my current position, I can roll short jan 75 put to short apr 75 put for additional premiums due mainly to increased time premiums With some help from volatility increase. 

I can use the premiums collected to initiate a long call position. Eg collect $1 in premiums from rolling puts to by $0.9 worth of long call. Last I checked it was still possible to buy long Feb 75/80 call.

This position will remain as either little credit or net zero, which increasing my bullish positioning using the long call. Effectively forming synthetic long stock. 

Well, that's the plan... but I messed up. 

[Cry]  [Facepalm]  only have myself to blame, but well let's blame lack of coffee as well.

During the roll, I did the rolling to the wrong strike....

I rolled to short apr 72.50. This resulted in debit position instead of credit... how to get enough premiums to buy my calls.... [Facepalm]  

Then I thought about it, why not just add another Apr $75 put to complete the roll. 

After being filled, I [Facepalm]  yet again.

Since the debit is only $0.3, I didn't need to go for $75 strike, I can simply go for apri 65 put which gives the highest value with lower risks. 

Coffee... coffeee... coffffeeeee....

Well, after completing the roll at short apr 75 and I felt like such a joker, I decided to just keep with the additional Short put positions. The beauty of it is that as the short put is deep in the money, it will be as aggressive as otm long call, unless there's a major move up. In addition, when selling options, time decay works in my favour, while time decay works against me when buying options. 

My consolation is that frankly, I hate to buy options, my track record is terrible when it comes to buying options. 

Hence, it could just work out for the better. 

Reminder that morning coffee is very important.... [Facepalm]  [Facepalm]  [Facepalm]