In the month of November 2019, I kept suffering from my trades on indexes. I took a loss of about EUR 3,000. If there was a lesson learned, then liquidity, stop loss and too many open positions are 3 simple things to follow in the future.
Anyhow, I decided to stop trading instruments without underlying (no more futures or indexes until further notice)
The further written is copy/paste from my e-mail to a friend/ coach/ mentor (little editing added to make it blog readable)
As I had a negative balance of -3,437 EUR (not liquidity, but cash balance) - I decided to recover slowly:
- stop trading indexes and futures
- deposit additional cash in batches (~ 500-1000/mo)
- sell naked puts on dividend stocks I would like to have
I have two dividend stocks which are from my league - I wouldn't say I would love them, but in the past, they have worked pretty good (dividend + options)
So the stocks are: XIN, WPG
On WPG I've already sold January, April, and July options most probably will sell 1 or two additional positions on July
On XIN I have only Jan puts so far, looking to sell April and July puts very soon.
In the case with XIN, the stock price is $3.91, strike 5 and premium 1.25, yes these are ITM strikes, but I'm ready to take the stock, the dividend is risky, but I'm ready to take the risk
The ultimate goal is to get cash balance to positive by selling naked puts.
- I deposited an additional 450 EUR today, so the balance will go up to -2987
- Then after selling naked put on XIN, it will go up even further to ~ 2,862
- I will decrease negative balance by ~ - EUR 575 investing only 450
Despite I will get assigned XIN stock in April with a 95% guarantee I'm happy with that.
I hope to get under -1,000 by the end of the year. Will see.