To The Moon

🐼 Selling Fear Instead of Buying Panic: My KWEB Put Strategy

🌊 China Internet Stocks Have Entered Maximum Panic

The recent selloff in China internet stocks has been dramatic. The KraneShares CSI China Internet ETF (KWEB) has plunged sharply, dragging down many of the biggest technology companies in the sector. Stocks such as Alibaba Group, Tencent and Meituan have corrected between 20% and 30% from recent highs, creating a wave of fear across the market.

For many investors, this kind of drop triggers panic selling. But experienced traders often look at the same situation differently. When markets panic, options premiums rise and volatility increases. Instead of rushing to buy shares immediately, some investors choose a strategy that allows them to get paid while waiting for a better entry price. That strategy is selling puts.

Rather than chasing the rebound, I decided to sell puts on KWEB at $25. This approach gives me a buffer against further downside while collecting premium income.

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📉 The RSI Signal: Extreme Oversold Territory

One reason traders are watching KWEB closely is its extremely low Relative Strength Index (RSI). The RSI measures whether a stock is overbought or oversold. When the RSI falls below 30, a stock is considered oversold.

But KWEB recently dropped even further, with its RSI dipping below 20. Historically, this level has only appeared a handful of times over the past decade. Each time the ETF reached such extreme pessimism, it was often followed by a short-term rebound in the following weeks.

Oversold conditions do not guarantee an immediate reversal, but they do indicate that selling pressure may be exhausted. In other words, the market may have already priced in a large amount of bad news.

For tactical traders, these moments of extreme fear can create interesting opportunities. However, instead of blindly buying the dip, selling puts allows investors to benefit from high option premiums while waiting for the market to stabilize.

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🐶 Why I Prefer Selling Puts Instead of Buying Immediately

Buying during a crash can be emotionally difficult. Prices may continue falling after you buy, which creates stress and uncertainty. Selling puts offers a different mindset.

When I sell a put option, I am essentially telling the market:

“I am willing to buy this stock at a lower price — but only if you pay me first.”

In this case, I sold a put on the KraneShares CSI China Internet ETF with a $25 strike price. If the ETF stays above $25 by expiration, I simply keep the premium and walk away with income.

If the ETF falls below $25 and I get assigned shares, I will own KWEB at a lower price than the current market level. That creates a built-in margin of safety.

Options Puppy rule:

🐶 If you want to buy a stock anyway, let the market pay you first.

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🛡️ Building a Buffer with Options

The key advantage of selling puts is the buffer created by the premium received.

In my case, I sold the put for $0.20 per contract. That means I collect $20 per contract upfront.

This effectively lowers my potential purchase price.

For example:

Strike price: $25

Premium received: $0.20

Effective cost if assigned: $24.80

This means the ETF can fall slightly and I still enter at a lower price. Compared to buying shares directly, selling puts creates extra protection against short-term volatility.

In volatile markets, this buffer can make a big psychological difference.

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📊 Why $25 Is an Interesting Level

The $25 strike price is attractive because it sits near an area where buyers have historically stepped in.

Large corrections in China internet stocks often create support zones where value investors begin accumulating positions. If KWEB approaches those levels, demand may increase again.

By selecting the $25 strike, I am positioning myself below the current market price while still collecting option premium.

If the ETF rebounds as it has done historically after extreme RSI readings, the option will expire worthless and I keep the premium.

If it drops further, I may receive shares at a price that already reflects a significant correction.

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⏱️ Choosing a Short 14-Day Expiration

For this trade, I selected a 14-day option expiration.

Shorter-dated options have several advantages:

• Faster time decay

• quicker premium collection

• ability to adjust positions frequently

Options lose value as they approach expiration. This process is called time decay. By selling shorter-term options, I can take advantage of this decay more quickly.

If the market stabilizes or rebounds within those two weeks, the option’s value may decline rapidly, allowing me to close the position early or let it expire.

This shorter timeframe also reduces exposure to unexpected market events.

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📷 How I Execute the Trade (Step-by-Step)

For traders who want to replicate a similar strategy, the process is fairly simple.

Step 1:

Open the options chain for the KraneShares CSI China Internet ETF.

Step 2:

Select an expiration date around 14 days away.

Step 3:

Choose the Put option chain.

Step 4:

Locate the $25 strike price.

Step 5:

Select Sell Put.

Step 6:

Set the option premium around $0.20.

This creates a limit order where you collect the premium if the trade is filled.

When writing an article or sharing a trade idea, screenshots can help readers understand the process. You can include images such as:

• the options chain

• the strike price selection

• the premium being sold

• the order confirmation screen

These visuals help explain the strategy clearly.

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⏰ Why I Adjust the Order After Market Opens

One important detail in options trading is timing the order entry.

The first few minutes after the market opens can be very volatile. Bid-ask spreads are often wide, which makes it harder to get a fair price.

That’s why I prefer adjusting the order around 10:30 AM after the market opens.

By that time:

• liquidity improves

• spreads tighten

• price discovery becomes clearer

This increases the chances of getting filled closer to the desired premium level.

Patience during order execution can make a noticeable difference in overall trading results.

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📈 Can the Tactical Rebound Last Longer?

The big question now is whether the rebound in China internet stocks can continue.

Extreme oversold conditions often lead to short-term rallies, especially when pessimism becomes excessive. With the RSI dropping below 20, the market may already be pricing in significant negativity.

However, short-term rebounds can sometimes fade quickly. That is why selling puts offers a balanced strategy.

If the rebound continues:

I keep the premium.

If prices drift lower:

I potentially acquire shares at a lower effective cost.

Either outcome can work in favor of the strategy.

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🐶 Final Thoughts: Let the Market Pay You for Patience

Market crashes often create emotional reactions. Many investors either panic sell or rush to buy the dip immediately.

Selling puts provides a calmer approach.

Instead of chasing prices, I simply set a level where I am willing to buy and let the market decide.

By selling the $25 put on the KraneShares CSI China Internet ETF with a 14-day expiration and $0.20 premium, I create a buffer, collect income, and position myself for a potential entry at a lower price.

As the Options Puppy likes to say:

🐶 When the market panics, don’t chase the ball. Sit patiently and collect the treats.

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