Mooers' Stories | Options Special: Rather miss a trade than force a trade, said @Masakaki_C_jpeg
Hi, mooers. Welcome back to Mooers' Stories, where we present mooers' insights and experiences. Today, we are excited to bring you a special post on options trading with @Masakaki_C_jpeg. He will be sharing his approach to options trading, best and worst trades, and other valuable insights into the world of options trading as an experienced practitioner. Continue reading to learn more about options trading, and join the discussion in the comments below.![]()
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When did you start investing?
I started investing around 2017. I do investment/trading because I hope to find a reliable way to make more money consistently so that I can achieve financial freedom at an earlier age as compared to my peers.
I started out as an FA (Fundamental Analysis) investor and aim to hold a longer term, but after a while I realise finding out good FA stock is much more difficult than reading a few books and using certain metric. So after a while, I decided to do trading instead of investing, as trading makes me more agile in my positions.
How did you get into options trading, and why?
I started doing option at 2021. Options can serve like insurance for your existing position or even use it like a discount coupon for stock that you want to buy. e.g.if you want to buy stock A with some discount, you can sell a put option so that even if the buyer executes it, you still manage to buy the stock you want but offset some of the costs with the premium you have collected.
This can potentially complement any trading or investment strategy.. or if you want to milk more profit out of your existing position, you can sell a call to limit your potential profit by collecting some premium. Since you intend to sell at the strike price, why not earn more from the strike price in the form of premium.
How did you develop your expertise in this area?
I prefer the course conductor to break down all the basis that formulate the options, so I will know how the stock price move will affect the options price. Also, how to use options to complement different trading strategies. Like other than long or short stock prices, we can also use options for long or short volatility, or bet that the stock price will not go above or below a certain price level.
I do read books on investment that are not related to trading, like the principles of ray dalio, the outsiders by William N thornlike, investing between the line by l.j. Rittenhouse.
What's your trading approach?
My approach changes along the way... As someone with coding background and have interest in AI, I recently utilise data models to do prediction on daily stock movement. And I trade based on my data models.
I will say my idea is mainly because of my sensitivity to data and I like to break down any complex problems to smaller problems and explain with data.
How do you decide when to take profits or cut losses?
I managed risk based on position sizing. I will decide how much I will allocate for that particular trade, like 5% or 10% of the overall capital.
As for profit and cutting losses, I will just set a limit of how much I can take losses per day and how much profit I will be happy with. Like what Warren Buffett said, the first rule is to never lose money and the second rule is to follow the first rule.
How's your trading performance?
My performance is mostly affected by my emotions and not executing the way my model gives me, which is also part of my emotional error. So I need to strengthen this part. If I were to execute the trade by my model, the performance should be like 85% hit rate. But sadly, I did not enjoy the full 85% win rate due to my emotions and prior knowledge about trading. That is why it is a work in progress for me.
Could you share your best and worst options trades with us?
1) My best position is those that I wait for the stock price to reach my EP.
2) My worst positions are those that I buy on impulse.. I did not keep screenshot of my losses.. But I limit them by setting a stop loss
How do you review your options trades and analyze the results?
I use the moomoo calendar to track progress. Sometimes I will review what I am thinking at the point of time when I make that trade or what causes me to fall off track of my plan.
What lessons have you learned from trading?
Always stick to the plan... and rather miss a trade than force a trade. I think this applies to life too. :)
Get the Option Greeks right first and try simple strategy with a very small position to test. Without knowing the Greeks in options is really a bad idea. And also know how all those Greeks change as the price moves.
*Clarification from Masakaki_C_jpeg: Options is risky but because of the nature of how the Greek works, when the price move further away from your strike price, the less money u lost per dollar move as compare to actual mother share position where the magnitude is constantly the same as the stock move a dollar away from your entry.
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Topic: What else do you want to know about @Masakaki_C_jpeg? Any other topics you wanna discuss with him? Comment below to let us know.
Rewards:
1. 30 points: for mooers who raise insightful and Masakaki_C_jpeg-related questions
2. 70 points: for Masakaki_C_jpeg's every reply to mooers' questions
Time: From now to June 30, 23:59 ET
(Rewards will be distributed within 5–10 working days after the activity ends. Moomoo Points may be redeemed only through the moomoo app and have no other value.)
Notes: We encourage benign and in-depth interaction, from which all mooers can learn from each other, helping our community members be more courageous and not alone in their investing journeys.
We truly appreciate @Masakaki_C_jpeg for sharing his valuable and inspiring experience with us! Feel free to interact with him if you have anything to say!
Just in case you didn't know, you can also be the one to tell the story! Interested? Comment below to let us know! We'll reach out to you as soon as possible!
Thanks for your time. See you next time!
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Mooers LabOP :
Hey, mooers. Let's give a big round of applause for @Masakaki_C_jpeg. Feel free to interact with him if you have anything to say! There is a chance for you to win the points reward.
Just in case you didn't know, you can also be the one to tell the story! Comment to let me know if you're interested.
ZnWC : Dear Masakaki,
Thanks for your inspiring story. I'm still learning about investment and trading options and have a few questions about your learning experience:
1. You mentioned about retired early than your peer. Could you share more about your retirement journey? What kind of FIRE do you describe your retirement?
2. You mentioned about options trading. What's your most favourite options trading strategy? How much have you earn based on options e.g. profit per month?
3. Some said options trading can be very risky but high return. How do you manage your emotion when trading options or any high risk investment?
Thanks and hope to hear from you soon.
3.
momo98 : Hi, thanks for the insights. I like options but it is high risk and even the high probability trades don't always work. Eventually, the capital dries out as the option expires. Hence, what do you suggest for small account holders, and how to preserve our capital without risking too much?
Masakaki_C ZnWC: 1) I do not really have a good idea what is the definition of my retirement life but rather an aim to profits consistently. When I answer those questions is more of the initial reason why I start investing... To be honest I nvr thought about retirement at all..
2) I prefer to trade one way with data models my AI produce and my idea is always close on the day... I did try covered call or covered put but I don't like it...
3)yea it is risky.. still have a bumpy ride where I can't say that I am profiting consistently but so I can say still experimenting it...
ZnWC Masakaki_C: What type of retirement are you?
Masakaki_C ZnWC: actually I am none of them... if really want me to choose, I will choose coast fire
Masakaki_C : hope to make a clarification here.. I have not achieved what I intended from the stock market but rather experimenting it.... and to add a note to the post... options is risky but because of the nature of how the Greek works, when the price move further away from your strike price, the less money u lost per dollar move as compare to actual mother share position where the magnitude is constantly the same as the stock move a dollar away from your entry
Masakaki_C : not sure if Mooers lab can add this point to the original post...
Masakaki_C : and regarding to options strategy, there is no 100% winning strategy. all options strategy required u to guess the potential outcome and the potential risk you willing to take to come out with a strategy... so end of the day u still need to predict first
Mooers LabOP Masakaki_C: Already added it to the post.
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