Stocks and Options

Well, I’ve always had a retirement savings account, but mostly loaded with mutual funds that just get purchased every month with my 401k savings. They have pretty much been set it up and then just let it go type of investments. I did also open up a Ameritrade account to try some individual stock investing about 15 years ago. I seeded the account with $10k and never really made any headway by investing in individual stocks. I sold off most of this account in order to get money for the purchase of our house in Sacramento. I did leave about $1500 in the account and had it all invested in Tesla Motors (TSLA). I did pretty well with this account since Tesla has risen from $25/share to $190/share. Watching the stock market got me interested in investing and I started visiting some investment sites to learn more. What really got my attention was the group of people who made millions of dollars investing in Tesla. The particular case that got my attention was one where someone invested $1500 (same amount I had) and turned it into $350,000 in just a few months. They did it with options. So I spent some time learning about options and how to invest with them. This guy bought some options for TSLA for $0.50 in March that said he could purchase TSLA for $47 in September. By the time September came around the stock was trading at $160/share. So he bought 3000 shares at $0.50/share and then in September sold them for $160/share. Actually he sold them in June or July for about $350,000. That put my $1500 to $10k to shame.

So I decided to have Ameritrade enable options on my account. I do not have the funds in the account to have all the options features, but I do have some basic features. I can’t trade on margin or anything like that. So I recently did my first options trade. The result is that I got 100% return on my investment in just two weeks. I made a whopping $135. I decided to start small given that with options there is the possibility of losing 100%…actually in some options you can lose much more than that, but only if you are betting on a stock to lose. I’m betting to rise, so my losses are limited to 100%. I bought one option contract, which is 100 shares of stock option. I purchased on 10/2 an option to purchase CSIQ at $20/share on 11/16. The cost was $1.35/share, for a total cost of $135. To make money it would have to be trading for $20+$1.35 or $21.35/share. It was trading at about $18.50 at the time. On 10/16 it was trading at $22 which is already above my target which puts me “in the money” a month before the expiration date. I was able to sell my contract for $2.70/share doubling my money in just two weeks time. If I let the contract run to the end, I would have been able to purchase 100 shares for $2000. That would be much better than the $2350 it is currently trading at. I probably should have kept the contract longer, and probably should have kept it and then purchased the stock at the end, but since this was just a test run, I felt good about doubling my investment.

I’ve been following a lot of new investments, and in particular investments like the Canadian Solar (CSIQ) that I did the option contract on. Around the same time as the option contract, in my 401k account, I purchased shares in SolarCity (SCTY), Sunpower (SPWR), Canadian Solar (CSIQ), ReneSola (SOL), JA Solar (JASO), and JinkoSolar (JKS). All of these stocks have done quite well over the past two weeks. The solar panel industry is starting to take off because it is becoming popular all around the world. Not so much in the USA, but everywhere else. It is also popular here in the US, particularly anyone who purchases an electric car, since the solar will offset any power consumption from the car, and then you are essentially driving on sunshine.

I’m going to try another option trade as soon as an opportunity arises. Right now all the stocks I’m following are on the rise, so it is not a good time to make an option “Call” purchase. As soon as things settle for a while, I’ll be able to make my move.

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