I have no idea how to start a blog. I've never written one before, so I figured I'd start by sharing with you what I've been buying recently. Like anything else you spend hours and hours thinking about, your strategies change over time, and the strategies you employ will depend greatly on how much capital (Money $$) that you have. I'll give short explanations of my thinking on each purchase, and what my hope is for the future. Keep in mind, this is not investing advice, you make your choice based on your risk tolerance and the amount of money you are willing and able to lose.
Never buy stocks or options instead of necessities, this is not a race, it takes time and focus. If you add over time, be smart, and set yourself up to be as safe as you feel comfortable, you can have great success trading stocks and options. You will have losses when buying options, just like everything else, so again, only use what you can lose. I will update these options and add more as I buy/sell, my hope is to keep a running record to show wins and losses.
1. Western Asset Mortgage Capital (WMC)
Covid-19 has destroyed the Real Estate Stock Market, and I feel that this will be one of the largest growing areas over the next few years. This is giving way to some really cheap Long Options. I like WMC because it was a solid $9-$10 company before the crash, and as vaccines roll-out and the country begins reopening, we will see these stocks recovering.
Shares - None at this time, but I plan on adding some in the near future.
Option Strategy - Long Call
Option Expiration Date - 1/20/2023
Strike Price - $7.5 ($0.24 each) - Meaning I have the option to buy 100 shares of WMC at $7.50 per share ($7.5 x 100 = $750 per contract if you were to exercise the contract), no matter what the underlying price of the stock is, hopefully much higher than $7.5.
Maximum Loss - I bought 8 contracts at $0.24 each, 8 x $24 = $192
The Plan - I plan to hold these for a long time, ride up the recovery, and sell the option long before expiration, hopefully for a noice profit.
2. Electrameccanica Vehicles (SOLO)
SOLO is in the Electric Vehicle (EV) space, who operates out of Vancouver, British Columbia. They mass manufacture Electric Vehicles and Custom Build Vehicle Segments. This is a hot market right now, and this is a play into that hype, especially with the Democrat wins in Georgia, there will be more EV support over the next 4 years.
Shares - I bought 100 shares at $6.98 each, $698 total.
Option Strategy - Bull Call Debit Spread
Option Expiration Date - 1/21/2022
Buy Call Strike Price - $10 ($2.49 each)
Sell Call Strike Price - $20 ($1.59 each)
Spread Total - $2.59 - $1.59 = $0.90.
Maximum Loss - I bought 2 spreads, 2 x $90 = $180.
The Plan - I plan to hold the shares until the stock increases over time, and then I will sell a covered call (Only sell covered calls if you have 100 shares per call you sell) to collect premium. The spreads, I will hold as the stock climbs, and collect the premium between $10 and $20. I do not intend to exercise these options, I usually buy and sell spreads together, unless I am buying back the Sell Call because the stock lost value.
3. Nokia (NOK)
NOK is a network infrastructure, technology, and software services company out of Finland. The spread of 5G and the networks required put Nokia into a good position moving into the new year. I believe they will be making deals and increasing their market share as the year moves on.
Shares - None at this time, but I plan on adding some in the near future.
Option Strategy - Long Call
Option Expiration Date - 1/21/2022
Strike Price - $4
Maximum Loss - I bought 16 contracts at $0.68 each, 16 x $68 = $1088.
The Plan - I plan to hold these until Nokia closes a major deal, follow the climb up, and then sell the option long before expiration, again, hopefully for a noice profit.
4. Blackberry (BB)
BB is an Internet of Things (IoT) company who also offers cybersecurity consulting, enterprise consulting, and endpoint management and security. As we move into 5G and spend more time online with Covid-19, BB could find itself in a nice partnership at some point this year.
Shares - None at this time, but I plan on adding some in the near future.
Option Strategy - Bull Call Debit Spread
Option Expiration Date - 1/21/2022
Buy Call Strike Price - $7.5 ($1.72 each)
Sell Call Strike Price - $15 ($0.55 each)
Spread Total - $1.72 - $0.55 = $1.20
Maximum Loss - I bought 8 spreads, 8 x $120 = $936.
The Plan - Similar to Nokia, as the 5G boom begins, I believe Internet of Things (IoT) companies will also get a boost. I plan to hold these spreads and capture the premiums if Blackberry finds itself in a solid position moving forward in 2021.
5. Ideanomics (IDEX)
IDEX is another Electric Vehicle (EV) play. IDEX is a company working to facilitate the adoption of more Electric Vehicles around the world, providing next generation financial services and fintech product.
Shares - I currently own 600 shares at an average of $2.18 per share.
Option Strategy - Bull Call Debit Spread
Option Expiration Date - 1/21/2023
Buy Call Strike Price - $0.5 ($1.97 each)
Sell Call Strike Price - $7 ($1.22 each)
Spread Total - $1.97 - $1.22 = $0.75
Maximum Loss - I bought 8 spreads, 8 x $75 = $600.
The Plan - With the complete boom of EV companies and their associated companies, these small plays can be extremely lucrative. It does not take a lot of news for a stock to run for $2 to $8, especially right now with the volatility of the market. Add in that it is also providing financial services, and building massive sales floors for EVs, the Mobile Energy Global (MEG).
Final Thoughts
I am a firm believer that if you are patient, disciplined, and timely, you can be very successful trading options. The best part is that you can do it affordably (You can buy 1 contract, you don't have to buy multiple), safely (buying long calls to give yourself time), and Responsibly (You know your maximum loss on day 1).
When I am looking for companies to invest in, the first thing I do is make sure they trade options at least a year out. I want people planning to own their shares for a long time. When calls reach their expiration date lower than the strike price, they become worthless. This is a powerful tool Mr. Market uses control stock price around major expiration dates, 1/21/2022 or 1/22/2023 for example, expect lots of volatility leading up to and around these dates in the future, and plan accordingly.
I leave you with a comparison of sorts, I was curious what would happen if I owned shares of a company, and also call options. What would my returns look like, which was more "worth it," in the long run? I bought two $1 Calls in Marathon Patent Company (MARA) on November 2, 2020 and 300 shares on November 4th with an average of $2.50 per share. MARA is a Bitcoin mining company benefitting from the incredible surge over the last month. Today, as of January 7th, 2021, the exact calls and shares above, plus a $25 SELL (I sold for $3.05 before close today), leaving this experiment looking like this, after a 1-month run up to $22.48 a share at close.
What's been your best trade? Share in the Groups Section! Thanks for Reading.
Kevin Parker
Retail Trader
Dreamer of Financial Freedom