Gains from Gold to help cover some losses from Chinese stock
In February, I started adding Gold into my portfolio to hedge against the dollar as mentioned in this post:
I started "WHEELing" Gold ( $Gold Trust Ishares(IAU.US$) in February. In May, there was some action on my Gold position as we can see from the transactions below.
Firstly, my gold got called away and it was sold at $37 each due to a covered CALL position. For that trade, I made $50 from selling options and $195 from selling gold.
Right after that, I placed an order to try and buy back those Gold for $37 each, which was luckily filled after waiting for 2 days. This way, I'm back to where I had started. On top of that, I sold more options on Gold and pocketed another $75 in premium.
Tentatively, I am up $320 for hedging against the dollar by WHEELing gold. However, May had not been a good month for China. The long await China reopening economic boom, turns out to be just a little poof. Plus the economic war with US haven't been helpful in pushing the share price up.
I havld made investment into $Alibaba(BABA.US$ and $Futu Holdings Ltd(FUTU.US$ using a vertical CALL spread. This is so as to hedge against the uncertain Chinese market. Using a vertical CALL spread is way cheaper than buying the stocks right away. This means that I would risk lesser cash upfront. If either of the company stock's price goes to $0, the total loss is way lesser. However, if the company stock's price goes to the moon, I will benefit from it. More details on how to hedge using vertical spread option strategy can be learnt from in this post: Hedging with Vertical Spread in uncertain times
Sadly, the share price of BABA and FUTU had been dropping like grapes in May. FUTU dropped from $45 to $40, and BABA dropped from $85 to $80. As I still have faith (and time) in Chinese's stock, I started to roll the strike price of my spread down. The trade details can be seen in the order history below.
To roll my FUTU strike price from $45 to $40, I had to top up $390, so in a sense I had realised a loss of $390. However the benefit is I had gained a paper value of $1,000. So if FUTU goes back up to $45 on expiry, I would have gain $1,000 in value as compared to not rolling down. Similarly for BABA, I had roll the strike price from $85 to $80 by topping up $446, which means I realised a loss of $446. While at the same time gaining a paper value of $1,000.
I still have faith that Chinese stock will do well by the end of 2023. We still have 7 more months left so let's see how it goes ![]()
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crawled out of poverty, working towards FIRE!! (financial independence, retired early)
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73518424 : Thanks for your sharing. That's useful.
念ad : Thanks for sharing
doctorpot1OP 73518424: no problem at all
glad it had been helpful to you
doctorpot1OP 念ad: no problem
FreyatheFre : Wow. Thank you. This is really helpful to me
doctorpot1OP FreyatheFre: glad it is of help to you