First half of 2024 is all about rolling option on great trade
The first half of 2024 has been a promising period for my investment portfolio, despite its heavy tilt towards Chinese and Singaporean stocks. With a performance of 9.20% ![]()
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, my portfolio has outpaced the $Hang Seng Index (800000.HK)$, the $CSI 300 (LIST20861.HK)$, and the $FTSE Singapore Straits Time Index (.STI.SG)$, though it fell short of the remarkable gains seen in the US markets, particularly the $S&P 500 Index (.SPX.US)$ and the $Nasdaq (NDAQ.US)$. Of course all these pale when comparing with $NVIDIA (NVDA.US)$ insane gain ![]()
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The key to my portfolio's success lies in the exceptional performance of certain stocks from China, the US, and Southeast Asia. After three years of relentless downturns, the long-anticipated rally in the Chinese market finally arrived, akin to a phoenix rising from the ashes ![]()
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. Witnessing this resurgence has made a significant impact on my portfolio.
In the first six months of 2024, several major Chinese stock holdings surged in value, driving substantial returns. For instance, $Futu Holdings Ltd (FUTU.US)$ soared by 41.29%, $BILIBILI-W (09626.HK)$ increased by 20.40%, $JD.com (JD.US)$climbed 5.79%, and $Alibaba (BABA.US)$ edged up 3.01%. However, the gains were slightly offset by the declines of $NIO Inc. USD OV (NIO.SG)$, which plunged by 39.71%, and $UP Fintech (TIGR.US)$, which dipped by 1.85%. Nevertheless, I remain optimistic that this rally marks the beginning of a sustained bull market rather than a fleeting upturn ![]()
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On the other side of the globe, my investments in the US and Southeast Asia have also performed admirably. Stocks like $Sea (SE.US)$ rose by an impressive 68.8%, $Palantir (PLTR.US)$ advanced 28.55%, $Alphabet-C (GOOG.US)$ increased 24.5%, and $Grab Holdings (GRAB.US)$ saw an uptick of 8.9% ![]()
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. However, my covered call option strategy, which has provided consistent returns and stability throughout this period, capped most of the upside from the awesome rally ![]()
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. Thus, the first half of 2024 has been a journey of rolling over options, ensuring steady gains.
As I reflect on these past six months, I'm filled with cautious optimism for what lies ahead. The resilience and resurgence of these markets have been a testament to the enduring potential of strategic, diversified investing. Let's dive deeper into the details and lessons learned from this dynamic period in my financial journey.
Exercising Options and Embracing Assignments: A Bold Start to 2024
The year kicked off with a flurry of activity as I exercised my LEAPS CALL options and had several PUT options assigned. This dynamic start saw me acquiring shares in $JD.com (JD.US)$, $NIO Inc (NIO.US)$, and $Grab Holdings (GRAB.US)$ through assignments, while exercising my CALL options allowed me to add $Alphabet-A (GOOGL.US)$, $Futu Holdings Ltd (FUTU.US)$, and $UP Fintech (TIGR.US)$ shares to my portfolio. These strategic moves in 2023 set the stage for navigating the volatile waters of 2024 with a diversified arsenal.
Among these new additions, Nio has been the most challenging. As you can see from the chart below, the dip just keeps dipping! ![]()
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Nio's stock has been under significant pressure, largely due to China's sluggish economic recovery, intense competition from established EV giants like $BYD COMPANY (01211.HK)$ and $Tesla (TSLA.US)$, and new entrants such as $XIAOMI-W (01810.HK)$. Additionally, the imposition of tariffs by US and EU has further hampered its profitability and growth prospects, creating a perfect storm of challenges for this once-promising EV manufacturer.
While buying the dip is a familiar strategy that has often worked out well for me, it's important to remember that it's not without risks.
For instance, buying the dip on Palantir transformed a 70% drawdown into a remarkable 116% profit, showcasing the potential rewards of this approach. With Nio, I remain hopeful that it will eventually mirror Palantir's turnaround. The company's innovative battery swap technology holds significant promise, and I'm optimistic that it will drive future success ![]()
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As we continue through 2024, I'll keep a close eye on Nio and other key holdings, ready to adjust my strategy as market conditions evolve. This early-year activity has reinforced the importance of staying agile and informed, allowing me to capitalize on opportunities and navigate challenges with confidence.
New Trades and Strategic Adjustments: Navigating the Market Waves
In the first half of 2024, I actively expanded my portfolio by adding four new positions: $Sea (SE.US)$, $Bilibili (BILI.US)$, $SingPost (S08.SG)$, and $3M (MMM.US)$. Each of these trades has proven profitable thus far ![]()
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. I've since closed my positions in SingPost with an 11.16% gain and 3M with a 24.39% gain, while I'm still holding on to $Sea (SE.US)$ and $Bilibili (BILI.US)$ as potential future winners.
At the start of the year, I saw an opportunity in Bilibili, which had plummeted 90% from its all-time high. After three years of decline, this massive dip signaled to me a potentially great bet on the resurgence in Chinese tech stocks.
However, rather than committing a large sum to buy shares outright, an approach that could be risky if the stock continued to fall, I opted for a more cautious strategy. I invested in LEAPS CALL options with nearly two years until expiration. This approach allowed me to place a smaller amount of capital at risk while still positioning myself to benefit from any upside. If Bilibili's stock were to drop further, my losses would be more contained compared to owning the shares directly. Conversely, if the stock surged, I could buy at $10 per share, capitalizing on the recovery.
To further mitigate risk and generate income, I employed a "Poor Man's Covered Call" strategy. By selling shorter-term call options against my LEAPS CALL, I collected premium income and reduced my cost basis, while still maintaining potential upside. This strategy allows me to manage risk with a lower-cost alternative to owning the stock and leverage the long-term options for any potential gains.
Another notable trade occurred in late January when I purchased SEA shares at $35.95 each, just before their unexpected surge. Anticipating a neutral short-term outlook, I initially sold a covered call with a $40 strike price to lower my cost basis and protect against potential declines.
However, SEA's stock price began a remarkable bull run, prompting me to roll the covered call strike price higher multiple times. I first adjusted it from $40 to $46, then to $48, and eventually to $50.
This rolling strategy, where I adjust the strike price higher as the stock appreciates, has proven beneficial. It enables me to capture more potential gains while extending the expiration date to continue collecting premiums ![]()
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. However, as the stock price rises, the profit from rolling the covered call diminishes. Initially, rolling the strike price from $40 to $46 earned me $15 in premium and $1,800 in intrinsic value, resulting in a profit of $907.50 per month. As I rolled the strike price to $48, the profit decreased to $367.50 per month, and rolling to $50 further reduced it to $135 per month ![]()
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Despite the decreasing profitability of rolling deeper ITM calls on an uptrending stock, I remain committed to this strategy. My goal is to continue rolling the call up to a strike price of $66. While this will require patience, the incremental gains and time value captured with each roll add a rewarding layer to my investment strategy.
Overall, these trades and adjustments reflect my dynamic approach to navigating the market, leveraging options for income and protection, and adapting strategies to capitalize on evolving opportunities.
Rolling in the Deep: Rolling Covered Calls after Covered Calls
SEA isn't the only stock where I've been rolling deep in-the-money (ITM) covered call options in 2024. $Futu Holdings Ltd (FUTU.US)$, $Alphabet-A (GOOGL.US)$, and even my $Gold Trust Ishares (IAU.US)$ shares have seen their fair share of share price rally ![]()
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. Just as Adele famously sang, I have indeed been "Rolling in the deeeeepppppp"
When the Chinese tech stock recovery kicked in, it was both unexpected and swift.
Upon being assigned $Futu Holdings Ltd (FUTU.US)$ stock, my immediate response was to sell a covered CALL option. Almost on cue, the rally began, forcing me to adapt quickly ![]()
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To manage this situation, I opted to purchase additional shares below $50 to cover the covered CALL option. This strategy ensured that if my FUTU shares were called away, I'd still retain my initial position while gaining extra profits from the newly acquired shares.
Part of my recovery strategy involved leveraging stock cash coupons from Moo Moo's Lucky Spin. By using 500 points to spin a lucky wheel five times, we are guaranteed a minimum 2 SGD stock cash coupon and a "refund" of 100 points. If luck was on my side, I might even snag an Apple share ![]()
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Since we're buying shares anyway, leveraging on the lucky spin, offers a great return on points of at least 2 SGD per 400 points. After accumulating ten 2 SGD stock cash coupons, I embarked on a buying spree, adding 20 SGD and 200 more FUTU shares to my coffers.
Even with these extra shares, I did not just let them get called away. Instead, I rolled my covered CALL option to extract maximum value. Initially, rolling the strike price from $50 to $60 netted me $30 in premium and $2,000 in intrinsic value, resulting in a profit of $676.67 per month. As I rolled the strike price up to $65, the profit decreased to $193.33 per month, but I continued to milk every last drop from the covered CALL strategy ![]()
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Google faced a similar fate as SEA, with profits from rolling covered CALL options diminishing as the stock price rose. Initially, rolling the strike price from $125 to $130 earned me $10 in premium and $500 in intrinsic value, resulting in a profit of $127.50 per month. When I rolled the strike price to $135, the profit decreased to $82.14 per month.
Conclusion: Staying Agile and Embracing the Journey
The first half of 2024 has been an exhilarating ride, filled with strategic moves, unexpected market surges, and the constant need to adapt. From exercising LEAPS CALL options to rolling covered calls, each decision has underscored the importance of agility and foresight in investing.
Navigating the volatile landscape of Chinese tech stocks, capitalizing on the resurgence of the US market, and leveraging options strategies to maximize returns have been central to my journey. These experiences highlight a crucial lesson: staying informed and flexible is key to thriving in ever-changing markets ![]()
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One clear takeaway from the first half of 2024 is that in a bull market, covered call strategies can be risky. Rapidly rising stock prices make it challenging to roll options effectively, potentially capping gains and requiring frequent adjustments to avoid having the stock called away. While these adjustments can still yield profits, the returns tend to diminish with each subsequent roll, emphasizing the need for careful planning and adaptability in a dynamic market environment.
As we look ahead to the second half of 2024, I encourage you to reflect on your own investment strategies. Are you prepared to adapt to sudden market shifts? Are you leveraging all available tools to manage risk and maximize returns? Whether you're a seasoned investor or just starting, there's always room to refine your approach.
Join me in embracing the journey with a blend of caution and optimism. Continue learning, stay agile, and remember that every market twist and turn offers an opportunity to grow and succeed. Let’s navigate the rest of 2024 with confidence and a strategic mindset, ready to seize the opportunities that come our way ![]()
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Here's to smart investing and prosperous days ahead. Happy trading!
Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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151743798 : If you sell Chinese stocks and exchange them all for US stocks, especially high-tech stocks, you didn't have 9% in the first half of the year, but 39%. I'm curious if you're still buying Chinese stocks. Aren't big A-shares even better?
doctorpot1 OP 151743798 : It's true that US high-tech stocks have performed exceptionally well, offering significant returns that outpaced my portfolio's 9% gain in the first half of the year. However, my investment philosophy is grounded in long-term value investing, and I believe that Chinese stocks, particularly those with solid fundamentals, have the potential for substantial rebounds of 100%, 200%, or even 300% as the Chinese market recovers. That said, predicting market movements is inherently uncertain, and diversification remains a crucial part of my strategy.
Yes, I am still buying Chinese stocks, but I'm also diversifying my portfolio further by allocating some cash into bonds and REITs to take advantage of higher yields as interest rates are expected to drop. This provides a balanced approach, combining growth potential with income stability.
As for A-shares, I prefer investments where I can employ options strategies. Options allow me to hedge my trades and enhance returns through strategies like covered calls and LEAPS. Since I can't use options on A-shares, they don't align with my current investment strategy.
葡萄山 : We have no way of predicting what will happen tomorrow, but we must be prepared to take risks. And I think doing what we should do now is to prepare the best for the future.
steady Pom pipi :
doctorpot1 OP 葡萄山 : Absolutely. The future is always uncertain, whether we're looking at US tech stocks, Chinese markets, or Singaporean equities. This unpredictability underscores the importance of taking calculated risks and maintaining a diversified strategy.
US tech stocks might continue their impressive rally, but there's also the possibility of a correction. The same goes for Chinese and Singaporean markets. Given this inherent uncertainty, diversification is crucial. This not only means diversifying within the stock market across different sectors and regions, but also looking beyond stocks altogether.
In my strategy, I've been focusing on including cash, money market funds, bonds, REITs, and real estate in my portfolio. Additionally, starting up businesses further provides safety nets and enhances my diversification.
Preparing for the future involves a multi-dimensional approach. It's about spreading risk across various asset classes and regions, staying flexible, and being ready to adapt to whatever the market throws our way. By doing so, we not only mitigate risks but also position ourselves to seize opportunities as they arise.
101523250 : meaning to say it is useless compare the stock price with nividea its peanut after son long useless com burning off investor investment
doctorpot1 OP 101523250 : I didn't get your comment. are you saying that it is useless to compare our returns with Nvidia, and what is the second part?
葡萄山 : At polytechnic checking ECG, later reply you
doctorpot1 OP 葡萄山 : hope everything is well![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
葡萄山 : Thank for your advise, l totally appreciate it and your kindness. Because I new in this area, your advice is precious, l will keep it in mind.![[undefined]](https://static.moomoo.com/nnq/emoji/static/image/default/default-black.png?imageMogr2/thumbnail/36x36 "undefined")
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