Today, I completed my 90-day “probation” on trading options and broke through 5-figure realized trades for the month of June. What is incredulous is not the actual realized earnings but the gradual comprehension of how options work as well as learning to manage my risk effectively. A recent ST article in June published findings from a recent poll ” 1 in 2 high-income earners in Singapore has money problems” touches a cord because most of us are in the corporate race to reach our OKRs but we lack the time and energy to focus on ourselves and the skillset to learn to “fish” to improve our personal financial well-being.
During this time, I saw the possibility that most of us have the ability to take charge and write our own “year-end bonus” whilst balancing a full-time career.
Below are some learnings for the past 90 days where I took time out to learn on trading and I happen to focus on the asset class – stocks options. Note that I am not a licensed advisor nor is this post sponsored.
#1 Achieve A Sustainable Flow Of Income
Stock Options give a trader the right to buy or sell a stock at an agreed upon price and date. The draw of trading options is that it allows one to invest in global blue chips stocks at a fraction of the cost. Each option has a set date of expiry which can be weekly, monthly, quarterly, half-yearly or more. Through short term options, one can realize premiums from options consistently and set up new trades for the coming weeks. Compared to stock investing, earnings from options is faster due to the short term date to expiry. However, if untrained, options can be a dangerous asset class as losses can be exponential. Also, caution is crucial as each option contract is 100 shares; and if keyed incorrectly – losses can be exponential.
SO – Why options?
“Options allows traders to trade in a bullish, bearish or sideways market – at a fraction of the cost”
#2 Invest In Yourself
The best investment I have made is in the beginner course in stock trading back in 2018 which started me on my personal financial journey. Through it, I learnt on fundamental and technical analysis as well as joined a community of like-minded retail investors who are open to sharing various trade set ups as well as give input to my trade set ups. This started me on my journey in understanding how personal investment work. There are many such courses in the market. One can take the long way and watch multiple YouTube videos and learn from trial and error or pick an investment course with a community with good reviews to be guided in a structured way on how to trade, which brokerage to go with, tools in stock screenings and a sustainable community to learn from.
“Look not on the course fees but have a target on how fast you want to make back your fees and get a higher ROI from your trades”
#3 Find A Trading Buddy
Start your personal investing journey with your best mate or your spouse. I am lucky as my husband and I share the same interest – Financial Independence. With a trading buddy, you can learn together and motivate each other to get started as well as an ally to look at the soundness of your trade set-ups.
#4 Capital, Quantity, And Volume Matters
If you are new to investing, start by identify wide economic moat companies and work toward accumulating a minimal 100 shares of the stock so you can do covered calls to collect premium in a sideway market or sell cash secured puts on a discount for stocks you want to own. To gain momentum, how much capital you put in for options trading will determine the buying power and number of trades you can set up at a given time. Aim for a balanced portfolio of growth, cyclical and defensive stock to ensure consistent returns in different market cycles.
“Accumulate a minimal of 100 shares of a stock so you can do covered calls to collect premium”
#5 Put In The Time
To attain consistent monthly returns requires time and commitment. It helps that the US market opens weeknights from 9:30pm – and does not distract us from our working hours. For myself, I trade from 9:30pm to 1:00am. Fridays are the busiest as options expire every Friday and decisions need to be made to close, roll or enter new trades. Looking at the markets does not require 100% of my time. The rest I spend on online courses or even on Netflix. What I do nightly: Keep an eye on the market, look at good days to roll trades for a better premium and have a trade log so to keep tabs on monthly P/L of realized trades.
To attain consistent monthly returns requires time and commitment. You need to put in the time
#6 Start – By Opening A Brokerage Trading Account With A Good UI Platform.
Take up an investment trading course and join the community. There are no silly questions. Learn when you participate. Fund the account and start trading
I learnt there are different options (pun intended) to trading a stock. I learnt about risk management and how to repair trades when markets go a different direction. Not all trades will pan out. Win some, lose some. Sometimes, when there is a market correction and all counters are in red, one needs to develop nerves of steel to tide over the correction to better learn from trading mistakes. With options, it is possible to achieve 30% – 70% or your annual income – but consistent time, discipline, expertise, and effort is required as with all skills.
So – What Does This Mean?
Learn to take an active charge of your personal finance. Work your money harder. Learn to “fish” and consistently hone your skills so that you can accumulate your wealth faster and hopefully have time to eventually do what you want.
May the market force be with U!
PS. My passion is in personal finance and personal investment. With options, it is possible to achieve 30% – 70% or your annual income. I will be sharing more on my personal investment journey and hopefully inspire you to get started – on investing in a sustainable skill where YOU can actively write your own year end bonus