To The Moon

A turmoil month ended. But thanks to the big swing, my account looks good in May (25% vs 12% in April). Why is the big movement beneficial to me?

I mainly trade options, especially sell options. When the movement is large, the implied volatility of options is higher, I can earn more premium from selling options. On the other hand, there were extra benefits from April to May, and the earnings results brought big movements. I trade straddle Options.​Fortunately, after a seven-week selloff , Nasdaq had a sharp rebound last week. I have not exercised my Sell Put options, and my TSLA shares that I took over through a previous Sell Put have turned positive already. I also Sold Covered Callsl at $800 and $850.

I want to talk about how to make money stable from market volatility.

1) Keep your main investing strategy, don't change from market change. If someone pay overattention on volatility, that make him confuse.

I think trading is a PK between myself and the market. Whoever can resist the change of personal emotions brought by the market storm, who hold the initiative. The trading is a negative sum game (with commission), and who hold the initiative will make money.

I choose my familiar targets, because I have long-term tracking, and I am familiar with the nature、the volatility and market sense of the stocks.

I am not only long in one direction, but I may have long shares, Call and Put on the same stock, and I may also be an option buyer and seller at the same time. So I don't need too many target.

However, every time Tesla plummets, I review its fundamentals and data, whether there are any point I miss or can overturn myself, then I can make quickly decision how to do, put or call.

Looking back a week in May, I held both Tesla and Apple shares, PUT, Sell Call and Sell Put.Looking back on a week in May, I held both Tesla and Apple, PUT, Sell Call and Sell Put.

To review with TESLA, I took over 100 shares at price of $780 through Sell Put on May 13 (Friday) after settled. So when market open on May 16, I Sold a Call of $850 to form a covered portfolio with the shares. My judgment was that the stock price will not rise to $850 in the week, and I can earn premium of option. But if the stock price rises to $850, it will be more cost-effective for me, because I can get premium, and profit from stock rises at the same time.

Later, the stock price once fell to $700, and I Sold PUT at $600 and $650, and still held Sell PUT at price of $700 (which was exercised after closing on May 20th). I planned to buy at $700, $650 and $600 respectively.

Due to the sharp drop, the floating losses of stock were not small at that time, I bought two contracts of PUT due in June as a hedge.

Looking back, the timing of I bought PUT options was very good , I bought it on the day of rebound. I think I have some senses to TSLA. Continue to Sell Put options were that I have already decided Tesla's buying strategy before, and I don't want to change because of the market storm.

As a result, all the TSLA options made money, and the $700 SP was exercised, that is, I currently hold 200 shares with an average cost of $740, and the book is slightly profitable.

I thought that if it continued to fall, I would accept the floating loss of my positions and my PUTs may offset a little bit. However, according to my understanding of Tesla's stock, it falls fast, but it must rebound the fastest, so I won't cut loss.

3) Use 5%-10% money to bet events. I mainly do earnings, and Musk acquired Twitter brought option opportunities. This part is benefits. Since it is a gamble, it should be regarded as extra benefit, not deserved, and there is also a probability that losses will become waste paper.

At the beginning of the earning season, Netflix's thunder basically laid the melody of this earning season, regardless of whether it plummeted or not, but it must fluctuate greatly. In fact, it is very effective to use straddle strategy to trade options. see details： The Most Effective Option Strategy For Earnings is HERE！

In order to hedge the TECH storming, I bought $ARK Innovation ETF(ARKK)$ PUTs, my though is that the probability of thunder explosion in ARKK constituent stocks is the greatest. see more : 【Options】If only PUT one, this is it！

As for Twitter, when an acquisition is announced, most of investors like to do Sell Put. I think in turn, once the purchase price is much higher than the market price, it is equivalent to locking the upper limit. At this time, I prefer Sell Call. Musk's acquisition of Twitter is a long-standing event, and the probability of Sell Call is higher than that of Sell Put.

Twitter Option Trading:Review and Consideration

There are also some personal observations that we must keep a close eye on the unusual options list, especially on big stocks. The unusual options often reveals the trend early, and the winning rate is very high. You can see the articles I wrote before： What trading opportunity from NFLX‘s options？