To The Moon

I am going to add to the same topic I shared last week but not shared by @Tiger_comments. Not sure this will be shared, but it is an important lesson for a relative options newbie like myself!

If you have followed my recent posts, you would probably know I have been holding $CRITICAL METALS CORPORATION(CRML)$, at least enough to make a decent return. In fact, it's officially my latest 10-baggers! [Tongue]  

What has this got to do with my options lesson? I sold covered calls on it... Like I said, I have shared that... and this is a follow up.

CRML has been raising like nobody business when China imposed rare earth minerals export restrictions. To begin the story, let's say I know CRML shares price will go up. I had wanted to take advantage of the sudden increase, so I decided to earn a little side money by selling a covered call option at a price that I thought carried a good value, yet probably won't happen within 20+ days. How wrong was I there? It took less than a week for the share price to bypass that exercise price!

Way too cheap??!

The share price continued its upward trajectory as we all now know. What did I do then? I decided to sell a second covered calls on it! This time at $17.5, which was around $6+ away then. This time, the premium is a little more attractive too. 

How wrong I continue to be!? The exercise price hits within another week or so. Fast forward to 5 days ago. I sold another call option at $25... I thought with 4 days left, $7.50 upside looks too good to be true. That target was hit within 1 trading day! [Facepalm]  [Spurting]  

The price of CRML continues its upward trajectory, hitting around $33 within a day or two! Apparently, there has been heavy short selling on CRML (mine included since I was selling calls). This has resulted in shorts falling over one another to cover their positions. As a result of this short squeeze, CRML rises like no tomorrow. Only the last time days did the correction of CRML finally sets in.

I, for one, have been holding on to a cake 🎂 that no longer belongs to me! I had wanted to sell a little when the price hits around $33, taking the profit to 2000%. Alas, it was not to be! Selling covered calls, for the now seemingly paltry premiums, takes forbidden fruits 🍇 at that moment for me to a whole different meaning... [Cry]  [Spurting]  [Gosh]  [OMG]  [Blush]  [Onlooker]  Normally, if I had sold shares, I would just forget about the shares price performance after the transaction was completed. This is different, 🐯 app continues to show my "profit" just goes up and up (on paper obviously). All those profits are NOT mine anyway since covered calls limit my upside. Those past 4 days this week was the only time in my trading journey to silently pray 🙏 for correction to finally sets in! [Evil]  [Tongue]  [Silence]  

I don't mind sharing some profits... but not being able to collect the fruits 🍈 of my labour could be upsetting. 

End result? Readers should know that both $10 and $17.50 options are in the money as of today's close and the underlying shares are called away. However, I did end up with money in the bag 💼 and options experience in my head. 

It has been a roller coaster 🎢 week. AI and technology, cryptocurrency corrections threw up money 💰 to throw into both precious metals and critical metals sectors, leading to this seemingly crazy week. On Friday close, profit taking sets in for precious metals trade, especially the seemingly overcrowded gold and silver trades. But this is a topic for another time.

If you lost me along the way, takeaway this real life lesson, sell covered calls for those stocks you are not expected to fly anytime soon... definitely not when they are flying... when they took off, they are so ever difficult to catch up. Another important lesson is never compound your error by follow up with another. Two wrongs really doesn't make one right. Not even three wrongs! [Spurting]  [Smug]  [Facepalm]  

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