Recent Options Trading

Shorting volatility, although akin to grabbing a hot coal, can be profitable if managed well. The volatility of $Super Micro Computer(SMCI.US)$ is excessively high; there are even trades for 1800 call options at expiration. Obviously, this strike price is unattainable, but due to the high volatility, there's a significant risk of interim losses. Position control is crucial; one must avoid being liquidated before dawn. (Of course, the purchasing power required for shorting options is astonishing. I take profits intraday and look for the next opportunity.)

It's essential to learn to cut losses! After the market frenzy, there are "ghost shares" everywhere!

Undoubtedly, the US stock market is currently in a bull phase! Although many are surprised by its bubble-like nature, it hasn't completely burst yet, although caution is warranted—timing profit-taking appropriately, leaving some fish in the sea unconsumed.

For example, after the sharp drop in $Alphabet-A(GOOGL.US)$ due to AI model issues, going long with short puts is an absolute opportunity. However, sometimes it takes time, and there may even be interim losses. (Of course, the pros go straight for long calls! But my perspective here is from that of an options seller.)

Also, $NVIDIA(NVDA.US)$ has experienced sharp adjustments. At such times, going long with short puts presents an opportunity. Perhaps NVDA is overbought, but its performance is solid. As long as the strike price is set low enough, there's no need to worry about it falling below. Additionally, I still employ short-term strategies, taking profits timely and moving on.

3.1 If a stock has risen too high before the report, selling calls, even deeply out of the money, ensures peace of mind, even if the earnings report is excellent.

3.2 Similarly, if a stock has been declining, selling puts, also deeply out of the money, ensures peace of mind, even if the earnings report is disastrous.

3.3 Strike prices must be carefully evaluated based on fundamental and news factors. Safety comes first. If options cannot be sold at a reasonable price under safe conditions, don't do it!

3.4 Whether to opt for near-term or far-term options requires comprehensive consideration. If volatility is high and strike prices are sufficiently out of the money, I tend to prefer the far-term options. After the earnings report, as volatility decreases, I immediately release the margin and take profits.

3.5 Additionally, choose options with good liquidity. At least check if there is a relatively large open interest in the options. Otherwise, it's not easy to close out positions, and you may have to sell at a discount.

Options sellers fear black swans the most, so it's best to choose:

- Tech giants, with a preference for those with slightly higher volatility, such as $NVIDIA(NVDA.US)$ , $Tesla(TSLA.US)$ , $Invesco QQQ Trust(QQQ.US)$ , and $Alphabet-A(GOOGL.US)$ .
- Short puts on $iShares 20+ Year Treasury Bond ETF(TLT.US)$ for over 20 years. A simple consideration: the interest rate hike cycle has ended; it's just a matter of the extent and pace of the rate cut.
- Short calls on $United States Oil Fund LP(USO.US)$ when it seems high and short puts when it seems low, both out of the money and far-term. It doesn't tie up much capital, and you can harvest when the time comes, although you may close out positions in between.
- Speculate on hot stocks by shorting calls, also extremely out of the money. Essentially, it's shorting volatility. For example, $Super Micro Computer(SMCI.US)$ , $Advanced Micro Devices(AMD.US)$ , and $Arm Holdings(ARM.US)$ . Take a small profit and run.

5.1 $Arm Holdings(ARM.US)$ seems to be entirely controlled by market makers. With the increase in unlocked stocks and circulation, there's a high possibility of a significant drop. However, the timing is difficult to determine. Prepare to short calls opportunistically. They may not be extremely out of the money, but they should be far-term.

5.2 $Super Micro Computer(SMCI.US)$ is currently overbought, but it still has solid performance support, so it's unlikely to plummet too much. Based on recent issuance price ranges, speculating with short puts (the volatility is too enticing!).

5.3 AI hype remains unabated. Computing power has been hyped up quite a bit, and I'm not willing to chase high, nor do I think it will undergo a deep adjustment. The explosion of AI applications may present opportunities in the future. The specific companies need exploration. $Microsoft(MSFT.US)$ and $Alphabet-A(GOOGL.US)$ should get a slice of the pie.

5.4 Keep an eye on $Japanese Yen Trust(FXY.US)$ to see if there's an opportunity.

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