Feb 062022

Another two weeks has passed since my last update. My holdings have been relatively steady up until Friday, when there was a big jump. I sure hope last week was the bottom.

My index fund is up $53 from last update. It’s still down ($126).

RIOT improved slightly, but that’s mostly since bitcoin rebounded to over $40,000 on Friday. If I wrote this on Thursday I’d still be down around $600. Instead I’m down $413. Hopefully bitcoin continues to trend upwards.

My RIOT option is unchanged from last update despite RIOT trending upwards. That’s a good demonstration of the time value of options. When it was six weeks to expiration and RIOT was trading at $14.66 the option was worth $63. Now it’s four weeks to expiration and with RIOT trading at $17.24 the option is worth $64. The reason is that options further out of the money are worth less, but options with more time till expiration are worth more. In this case the two things cancelled each other out.

On Thursday the option was worth about $34. I could have sold it for a gain of about $62 but I didn’t, thinking RIOT was dropping further. As you can see the Friday jump caused the option to increase in value by 109%. Not good for me, the seller, but at least I’m still in the green. I might end up closing the option for my paltry gain of $31 and open a new one with a later expiration. Stay tuned.

After buying my original 100 RIOT shares I had $261 leftover. Then I made $90 off the first option, and I currently have the $95 in premium from the second option for a total of $446 in cash. (note when you sell an option you immediately get the total value deposited in your account)

I decided to use the leftover money to open a second position. I purchased a LEAPS (Long-Term Equity Anticipation Securities). In short, it’s a call contract that simulates owning 100 shares of the underlying, but it uses leverage to increase your upside potential along with downside risk.

I purchased a $2 call contract expiring January 19, 2024 on NNDM, an early stage 3D printing company. Normally I’d stay away from such an early stage company but apparently they have more cash than the price of all their outstanding shares. I.e. they have around $1.4 billion in cash and all their shares could be bought for about $1.1 billion. So it’s like buying a dollar for $0.78.

It’s already paying off. I purchase the contract for $363 and I’m already up $76.50, which is 21%!

Thanks to NNDM, the small bitcoin rally to $41,000, and my options sales my gambling account is now only down ($215.40), or about -9%, that’s a huge improvement from two weeks ago when I was down over 20%!

The new tracker is below. It shows the return on the original $2397.50 for each category. I’ll share the change from last update as well. This time the gambling account is up $331.60 and investing up $53.

As always, you can use my link to get a referral bonus of up to $1000 in free IBKR stock.

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