To The Moon

As 2024 draws to an end with Christmas bells ringing, I finished adjusting most of the positions for the year. 

Looking back, I started 2024 with backlog from 2023. 

I did 2 major mistakes then in 2023.

1. Overconcentrated positions in Alibaba, which resulted in big swings against my portfolio. Margin requirements went up significantly also, as at peak, up to 80% of my margin requirement was used up by Alibaba. I resolved to reduce my Alibaba sizes in 2024 and diversified away. 

This is also the reason why many experienced investors advocated portfolio and risk management. Over concentration does bring fast money, but disproportionate risks as well. 

2. Earnings play. During 2023, I dabbled in earnings play by selling short strangles. Most of the time, I made money, but the times that I was wrong costs me dearly. After more than 1 year, I am still stuck with some of the positions due to massive post earnings move such as target and estee Lauder. 

With the experience in 2023, my priority is not on gains, but on rebalancing my portfolio, learnt from my mistakes and move on. 

Looking at 2024's performance 

My target is 1% per month, which I achieved. I am happy with the results considering that I am focused on rebalancing and recovery. 

Can't be compared to Nasdaq's performance, but as long as my Portfolio's performance beasts inflation, that's all that matters to me. 

Looking back at the trades, there are 3 particular counters that are Unique in their own ways.

1.$Alibaba(BABA)$  

My happiness and pain point in 2023.

What happened in 2023, was that I was assigned baba put options at $120. Then I averaged down with more put options at $105, which was also assigned when baba crashed downwards. With the averaging down, ny average price was $112.5. I continued to sell call options by converting position to covered calls, reducing margin requirement and also using the premiums collected to reduce the losses. 

This entire cycle lasted until the recent baba rally which allowed me to exit my stock with bare profits During October at $112.80.

If I am a normal stock investor in baba, I would be upset cos after so long, minus commissions there's actually no profits to be made. 

However, as I am an options seller, when selling the puts prior to assignment, I made money. I continued to make money from selling call options. 

After I sold off the stocks, I maintained the calls and restarted selling Alibaba puts to convert to Alibaba strangles. Pocketing premiums from both the selling of call and put options.

overall thankful for baba for helping to validate that my strategy works.

2. DJT

In 2023, I played around with shorting microstrategy by selling call options and got burnt when crypto shot up And I chose to take losses. I regretted the move as after I took loss, micro strategy dropped. 

It's a painful reminder that markets can remain irrational longer than we can be solvent. During that time, cos of overcentration in Alibaba, I didn't have sufficient margin to maintain microstrategy short calls. 

Realising this, in 2024, I did things differently. Overvalued stocks will eventually fall back to valuation, how and when is the unknown. But opportunity is there. 

In order to be contrarian investor and short against the popular move, short calls are the right strategy as it allows for buffer by allowing strike prices to be significantly higher than current prices, which allows for when positions don't go our way. 

Time is also on our side as not only do we not need to spend on interest to short stocks, we get paid by decaying time premiums. 

This time round I targetted GME and DJT. Both worked well, by selling call options that are 45 days or more with delta 15-20. 

Trades are also entered in smaller lots and added more when stocks move against my initial positions. 

Max margin for speculative stocks are also capped at 10-15%, to avoid major move against my positions. 

Overall, not too bad a strategy.

3. Coinbase 

This is the counter that made me [Facepalm] .

It started off with simple coin call back in 2023. Made some money.

Then coin rallied. The initial Call strike was $100. 

At dec 2023, the high was at $187.39. The position was deep in the money.

I started to repair position by first, rolling in time. When the premiums dropped due to far out of the money.

I initiated selling puts at same strike to form straddle. When I roll, I rolled the entire combination.

After rolling and defensively repairing for 1 year, all the while collecting credit from premiums, I managed to adjust my straddle to $150 short straddle from $100 call...

I almost repaired the position, until trump came along and caused me to restart the saga again... [Speechless]  

Time to continue rolling my straddle for credit until I can exit this mess....

To be continued in 2025....

 To sum up 2024 in 1 word, for my portfolio anyway, it will be "Repair". 

2024 maybe a good year for those who invested heavily into tech like Nvidia, PLTR, mag 7, but my focus even before 2024 came was to repair my damage from 2023. 

The damage isn't just in terms of portfolio, but also the way I view my portfolio and strategy. I realised that I was inadequate In 2023, despite having so many posts then. That's also part of the reason y in 2024, I posTed lesser and focused more on getting my own strategy in order. Well, embarking on new company and having a young kid sure doesn't help with time management. [Shy]  

Looking ahead in 2025, with the adjustments in portfolio and having gained experience in switching from losing positions to winning positions, I am sure looking forward to 2025.

2025 could well be an excellent year for options sellers as volatility is expected to be high, especially with trump throwing chaos everywhere. Opportunities could come and reverse to losses very quickly due to policy changes from trump and the reaction from other parties to counter his moves. 

Eg. Trump tariff China, China devalues rmb and slaps tariffs back. 

Stock valuations are at all time highs, can't really see it going up by much, but the downside is like falling off a cliff. All in all, an exciting year ahead.

Merry Christmas to tiger and everyone [Cool]