To The Moon

@Mathematical Money is a rising Star Contributor in the Tiger community, with nearly 10k followers, thanks to his valuable trading insights. He specializes in strategies like cash-secured puts, covered calls, and strangles, focusing on high-yield stocks with strong fundamentals. Using a simple Excel sheet for portfolio management, he emphasizes that proper position sizing is more important than stock picking or timing, helping to achieve outsized gains and reduce emotional decision-making.

Currently, he has achieved a Rate of Return of 382% over 3.6 years, and obtain a profit over $500K USD trading crypto stocks in 2024.

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Briefly introduce yourself, share your personal investment growth experience, and how you made your first bucket of gold in the market?

Hi everyone, Mathematical Money here. To be honest, I used chatgpt to come up with such a name. Just ask chatgpt to suggest a name where my trading habit is largely based on probability and math. They gave me some stupid names and this is the most decent one I got.

I am engineer by training and started my career in the harsh environment of the shipyards. I’ve been lucky to meet great bosses who exposed me to the financial and business aspects of the businesses. I was able to pick up accounting skills in this job, and I became part of the team sourcing for deals, evaluating deals and making feasibility studies on proposed deals. With the exposure in these areas, it sparked my interest in investing in companies to generate “income” for me rather than working for money.

I started my earlier days in short term trading in stocks and forex trading. There was not much consistency for many years until I started buy and hold strategy. Even then, I was not able to generate consistent income as most of our time is “waiting” for stocks to realise its potential value.

During covid, I started learning options trading with a few friends and we found it much easier to manage our entry/exit and emotions. With options, which is now the majority of my transaction volume, our P&L curve is smoothened out to have less spikes and dips.  

What is the most impressive investment experience you have had?

The 2022-2023 downturn was one of the best lessons we’ve had. It was a time where everything will continue to go down no matter what kind of quality stocks you have picked. The impact that money supply, interest rates and money market funds have on the market no matter how strong the individual company/stock is. At this point in time, do not fight the market, you can only take what the market gives you. Everybody is a guru during bull market, but the only guru is the one who can manage a bear market.

Are you trading full-time?

Nope. Actually this is just hobby, and I'm working full time. It's a group of ex colleagues, trying to encourage our friends to trade with us. We just share knowledge and trade together because we believe this is the only way to freedom.

Regarding the team you mentioned, how do you assign the team’s task to each member?

We don't really have a task. but each of us specializes in an area of the market, like china stocks, tech stocks or REITS. We put our thoughts in the group and have free discussions, but we monitor each other to make sure we do not leverage. We don't monitor that much things, just follow a plain excel for portfolio management. Focus on the few high yield stocks with proper fundamentals. Simple as that. 😆

You have been trading numerous cryptocurrency stocks recently, what’s your opinion in this sector? And what’s your thought on Bitcoin’s subsequent trend?

My trades in 2024 are predominantly on crypto for a few reasons. Firstly, believe USD will continue to depreciate because of excessive government spending (but this may change when DOGE is being setup). Secondly, interest rates are expected to fall which also would bring down the dollar's strength. Third, Bitcoin 4 year cycle indicates halving is in 2024, which normally a bull run will follow. That would already support the prices of crypto currency. maybe just to add. We believe it is important to be cautious going into 2025. The stronger the bull we see, the more drastic the drop. We are still cautiously bullish but we hope our followers will cut when they need to cut.

Can you briefly describe your overall options trading strategy? How do you determine the optimal strike price for options?

Mainly cash secured puts, covered calls and strangles. We try to keep to the basics and not go for the fancy stuff like Iron Condor or Butterfly. Strike prices are guided by our own set of deltas and gammas, support/resistant lines and also the bid/ask spread at that point in time.

You mentioned you follow an Excel for portfolio management. Can you elaborate on it?

Our summary page consist of this where it shows the outlook of options expiring every week for next 4 to 6 weeks. Also our target premiums per month based on the options we sell.

The page "portfolio" is the one that the beginners use. Easier to understand and lesser parameters for tracking. Basically we believe portfolio management and sizing are a big part. Much more important than picking the right stock and timing. Sizing it properly allows you to have outsized gains and remove emotions.

What factors or indicators do you rely on when deciding to enter or exit an options trade?

The beauty about options trading is the expiry of options are pre-determined. Hence, exits are mostly due to expiry or assignments. Unless we need the liquidity in somewhere else of the portfolio, we normally do not close the options early.

Entry is usually assessed with quite a lot of factors such as macro conditions (interest rates and money supply), technical charts (basic support/resistant lines and RSI), then finally the fundamentals of company (forward earnings, cash availability and business potential). Once I lock in on a specific counter, we normally don’t switch around too often and stick to the same few counters for quite a few months at least.

Patience is the key in investing and our way of using options is just to ensure we have cash flow while waiting for the stock to pick up momentum.

How do you select stocks and what is the one or few things you focus on a stock?

First few things that will enter our search would be, 1) Market Cap of minimum size of the underlying asset 2) Liquidity of the stock and options 3) Cash holdings 4) Potential tailwind in the business/industry. One of the few things we try not to look at also is the historical price of any stock. Quite a lot of people would always look at the historical high and lows of each stock, but that to us is almost irrelevant as it only puts on emotional baggage to the trading mindset.

What has been your biggest challenge or mistake in options trading, and how did you learn from it?

The biggest challenge is managing emotions and one of the most common mistakes that I will still make sometimes is entering a trade due to emotions. In order to reduce these trades, we have a trading journal that we check on each other regularly. So that we stop ourselves from making emotional trades!

If you were to use one sentence as a slogan to get people to subscribe to your Trade Feed account, what would it be?

I have always had people telling me high % RoR are because of huge risks in my trades. Of course, all these come with a certain amount of managed risk and there will be no investment without risk. So I would say “Extraordinary RoR with properly managed risk!”

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