TSLA
Tesla
-- 421.060 PLTR
Palantir
-- 80.550 NVDA
NVIDIA
-- 134.700 AMD
Advanced Micro Devices
-- 119.210 OXY
Occidental Petroleum
-- 47.130 
Sending my portfolio to "options hibernation mode" as the bear market rally ended. See you in 2024
TLDR: Most of our portfolio got REKT, so I had been sending my US portfolio into "hibernation mode", while staying the course to use PUT options to DCA, and trading options to try and earn some extra dough. Luckily, I had learnt how to use options to reduce the pain, and it had helped a lot mentally and financially. Being a long term investors, this high interest rate environment (hopefully temporary) also made me look at long term bonds and dividend stocks too.
Transaction stats (partial month) is at the bottom of the post for full transparencyit may not reflect the full trade as this is just a quarterly review.
Story time
Quarter 3 of the market had been painful for most investors alike. It is painful to see our portfolio get REKTed by papa Powell continued interest rate hike. Everything got crushed, even bonds and gold got REKT. Can you imagine that UK government had to bail out their own bond market?
Quarter 3 of the market had been painful for most investors alike. It is painful to see our portfolio get REKTed by papa Powell continued interest rate hike. Everything got crushed, even bonds and gold got REKT. Can you imagine that UK government had to bail out their own bond market?
But it is in such times, that most money can be made. Bear market don't last, it will eventually turn into a bull market, just like how bull market don't last either.
So in Q3, I had been mainly staying the course of doing DCA on my long term investment, and doing some options trading. However, the difference is that I am starting to send my long term investment into hibernation mode, as well as looking more into long term bonds and dividend stocks.
Why long term bonds and dividend stock now?
I believe that interest rate will not stay high like this forever, even the Fed's dot plot shows that they are planning to drop interest rate in the future.
So if we can lock in the high interest rate for say 30 years or 50 years, that is advantageous to us. It not only lock in high yield for us now, price of the bond will appreciate as well when interest rates starts to drop. Why? because a 5% bond will be more valuable that newly issued 1% bond, so the 5% bond will be sold at a premium (higher price). So I'm keeping my eyes out on high grade bonds such as long term SGS bond, $Astrea7A1 4.125%320527# (V7AB.SG)$, $Astrea VI3%B310318# (6AZB.SG)$.
The effect is the same with dividend paying stock. So, if blue chip dividend stocks are giving high yield such as 6% that is also a great buy for me to lock in the yield now. Some of them includes: $SGX (S68.SG)$, $DBS (D05.SG)$, $CapLand IntCom T (C38U.SG)$, $CapLand Ascendas REIT (A17U.SG)$, $CapitaLandInvest (9CI.SG)$, $Mapletree Log Tr (M44U.SG)$, $Mapletree Ind Tr (ME8U.SG)$, etc.
Sending my portfolio to "hibernation mode"
High growth tech stocks and China had been REKT real hard. For high growth tech stock, it is common for the price to crash as interest rate goes up. This is because the bulk of the companies' value comes from exceptionally huge sum money they will earn in the future, hopefully. The problem with future money is that they are worth-less than money now. If we have money now, we can put it in TBill and guarantee that it will grow. So if the future money is not going to be more than that, we would take the money now instead.
So the Tbill yield is usually used to calculate how much we should discount future money at, which is also known as discount rate. So when interest rate goes up, this discount rate will go up, making future money worth-less. So when future money is worth-less, the company will be worth-less too. Thus, price of such company come tumbling down. This is just one aspect of why such company price had been crashing.
There is always 2 sides to the coin
So when interest starts to drop, what happens is that future money will start to be worth-more. Thus, price will start to go back up. So like most of the investors, we are HODLing and waiting for the price to go back up when interest rate start to drop in a few years time.
So instead of just HODLing, why not earn extra money from HOLDing the shares instead? That's what I had done. I started to sell covered CALL option with strike price that I'm willing to let the shares go at, expiring in 2023 and 2024.
Selling a CALL option means that the buyer can force you to sell 100 shares to them at the strike price, anytime before the expiry of the contract. You get money for selling the contract, they get the power to force you to sell your shares at the agreed upon price. A covered CALL option means that you have 100 shares per CALL option that you have sold, so that in the event that the buyer wants those shares, you're covered.
So I'm basically putting them in "hibernation mode" where I will be ignoring them until then. So you can see that I have sent $Palantir (PLTR.US)$, $UP Fintech (TIGR.US)$ into full hibernation mode. Waiting for $NIO Inc (NIO.US)$, $Warner Bros Discovery (WBD.US)$ and $Grab Holdings (GRAB.US)$ Covered CALL to expire, before sending them to full hibernation mode too.
As these position are in the red, some of them very red. Using this strategy, I get to earn extra money while waiting for the next bull market.
Continuous DCA using PUT option
In the meantime, this bear market is a great chance to pickup shares at dirt cheap prices. For those who missed the Covid crash, now here is another chance. I picked up a lot of shares during the covid crash, and now I'm picking up more stocks in this "everything crash" crash ![]()
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I'm continuing to DCA into shares of good companies that can survive a recession, so that when the market turns in a few years, I can sell them for a profit. Buy low, sell high, that is the game.
However, instead of just putting an order to buy the shares and wait for it to get filled, I'm using PUT options to get them.
Selling a PUT option means that the buyer can force you to buy 100 shares from them at the strike price, anytime before the expiry of the contract. You get money for selling the contract, they get the power to force you to buy shares at the agreed upon price.
So while waiting for my orders to get filled, I can earn extra premium as well. It is a bear market so prices will probably fall anyway. The premiums from selling PUT options also helps to reduce my paper losses too, slowly. This strategy had not changed since my post on it.
Short term options play
Most of the strategies employed above are boring and mainly for long term investing. So I also do use options to spice up my trading life a little bit. These plays only take up a very small percent of my portfolio. So if I lose everything, it is still alright.
So some opportunities that Q3 brought is to bet on the $Twitter (Delisted) (TWTR.US)$ vs $Tesla (TSLA.US)$'s Elon Musk case. I made a safer bet using options to bet that Twitter will win the case. For that bet, I'm likely to earn $560 from it. That is 11% in 3 months or 44% ROI ![]()
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But not every play is successful, I played $Bed Bath & Beyond Inc (BBBY.US)$ too, and ended up stuck in the mud with it ![]()
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The first few trades were great and then I gotten greedy. I believed in the power of the apes and sold a $15 ATM PUT. Now that the share price is only $5ish, I had to keep rolling the PUT down. I managed to roll from $15, to $11.50, not even halfway there ![]()
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This will probably take a year or so to roll, so that I can exit with some profit or no loss. However, that is assuming BBBY won't go under.
Lesson learnt, don't be greedy!!
I had to double down on my $ContextLogic (WISH.US)$ play as well, to slowly dig myself out of the much smaller hole ![]()
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Conclusion
Q3 had been a crazy ride down but boy it is a really fun ride. Luckily, I had learnt how to use options. Using options helped to reduce the pain in this bear market, mentally and financially. I'm sure that I would outperform compared to investors that are HODLing but don't use options to augment their trade.
If you like to learn more about options do search for the options group chat and join us ![]()
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Transaction Stats
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doctorpot1
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crawled out of poverty, working towards FIRE!! (financial independence, retired early)
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MonkeyGee : I agree, there will be no growth with this president. we will have to wait for 2024.
doctorpot1 OP MonkeyGee : oil price hiked in October as well, so not optimistic about Oct CPI
GoLeopard : thanks for sharing.
I learnt something from your post about BBBY. Be Patience.
In the case of selling Put, market fluctuations always drop near to the strike price, and one has to buy over the shares. I have no intention to keep the shares. So sometimes i choose "Buy to Close" the positions, just get rid of it and incur losses.
Next day, the market reverses. and there you go, pulling my hair again.
Paper loss is not the worst, but if you can roll the options and wait for months, and get back your money with some profits, why not?!
Always remind myself, roll if possible before close.
doctorpot1 OP GoLeopard : glad this had been of help to you![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
yea rolling option is an interesting concept as we always earn the time value... the drawback is opportunity cost and taking on continued risk of the share price dropping or company going bankrupt.
but if there are no better alternatives, then rolling is not that bad.
GoLeopard doctorpot1 OP : yes, options preferably traded on good stock with sound fundamentals. For speculative stock, have to exit fast and also protect with a spread. BBBY is one example.
doctorpot1 OP GoLeopard : yea regretted not exiting BBBY earlier... so now have to slowly dig out of this![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
70577514 MonkeyGee : even if Joe's not calling shots and either Obama or Hillary don't have clue how to run country either it honestly takes business man
and I was skeptical about Trump in beginning but my stocks were almost always green 
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MonkeyGee 70577514 : telling I didn't believe in all this shit before trump. no one gave the guy any credit for saving USA from one of the worst stock maket crash. now you have this clueless guy trying so hard to kill America. first it was oil and now its chips. do he know majority of the chips are made in China. if you squeeze china you are not going to win. they will have a world class chip factories over night. we need China for products, for consumers, and they hold most of our debt. the guy is clueless. wouldn't it make more sense to work together to save each other?
70577514 MonkeyGee : yes sir Trump done a lot for America brought back jobs from Mexico put tariffs on China and really and truly made America great the world is laughing at us because we got person as president was corrupt and to take his place is cackling ho and behind her we got sot and Xanax induced but .I'd say those people that did actually vote for Joe was because there Daddy was Democrat well mine was to but I think he would've been ashamed of what they have become.i know alot traders don't want talk politics but one has to do with other
MonkeyGee 70577514 : look I'm not saying Trump was angel and not disgusting. Biden is no different, just as scammy as the other guy. But with Trump you had laughter and money. with this guys it's one dumbass F up after another. why is he listening to the 80% who has no clue how to male a dollar to run this country. Trump was smart enough to side with the 20% to make sure the economy is strong. Biden will destroy your 401k by 2024. all that chip shit is stupid, we will not and can not be a world class chip maker without super inflation!
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