To The Moon

I feel numb after the holiday, the market sensitivity is worn out, and two important events are ignored:

• The yield on the 10-year US Treasury note rose to a six-week high at 1.644%
• Tencent continued to reduce its holdings by 2.6% SEA after reducing its holdings in JD.COM

It affected yesterday's growth stocks and China Stocks respectively, thus bringing down Nasdaq. Today, I will talk about how to stop lossfor sell put.

First, talk about the logic of stop loss:

@多算胜 shared this strategy with me：​When the stock price falls below the exercise price, short the stock, then change the sell put strategy into covered put.

The stock price is below the exercise price at expiration date, the stock will exercise together with put, and the trader will still get the royalty without taking over.

If the stock price rebounds and rises, it is necessary to close the stock at the short price. That is, the covered put is converted to sell put again.

Judging the stock price trend is the key point of this strategy. Because sell put is a long-term strategy based on taking orders, no matter how low put sells, as long as the trend turns to break through the exercise price and fall, it will be difficult for sell put to make a profit.

Covered put is a bearish strategy, which consists of short stocks and selling put. Contrary to covered call, it is a short strategy used by bears to close positions on dips.

That is to say, when you are ready to sell 100 shares and become a bearish strategy, you should make sure that the stock price trend has changed.

Specific to Pinduoduo

So let's look at Pinduoduo, did the trend has changed?$Pinduoduo Inc.(PDD)$

I think the answer is Yes.

Tencent has gradually reduced its holdings and become a big killer hanging over the head of Chinese stock, which is simply Bill Hwang. Although there is a plan to reduce holdings.

In addition, from the perspective of Pinduoduo's stock price trend, it has clearly broken its position.​

The operation

If you're selling$PDD 20220121 50.0 PUT $, Then sell 100 shares at $50~$49. If the short cost price is $4820, it will be no profit or loss according to the lowest price of $1.8 on December 7.

If you're selling$PDD 20220121 47.0 PUT $ ,Then hang a stop-loss selling order of $47, the stock price will automatically sell when it falls to $47.​

Note that it is a stop order, not a limit order or a market order. If you use the limit order to set the price at $47, you will sell it at the current price, because the limit order takes the best price .

Strategic feasibility

Coincidentally, I just practiced this sell put to cover strategy yesterday.

On Monday, January 3rd, I watched the stock market soar. I had Tesla covered call and NVIDIA sell put in my hand, and wanted to do something more, so I traded a sell put of amd $146.

The next day, it fell sharply on Tuesday. so I sold100 shares of AMD stocks to form a covered put portfolio. The covered put is expected that the stocks will exercise with put at the close of Friday, and I will receive royalties.

If the amd trend reverses, then I will hang a stop loss order of $146, and buy the original price to close the position.

More strategy changes will be shared here at present. If you have any questions, please comment on the area.