Wednesday, 17 December 2025

Here we are, last month of the year and portfolio down due to Bitcoin

October was really the peak for Bitcoin so far, I didn't think that it would drop back below 100,000 but well things happen. Liquidity is drying up in crypto space as AI seems to be the better choice also I guess other factors too. 

In my previous post, I mentioned about holding cash secured puts in IBIT and actually it is really really close to those prices so I might have to buy those positions if it continues to drop and the option get exercised. 

Anyway, on the stocks side, we did see a slight pullback when Oracle recently announced their earnings with weaker than expected earnings and forward guidance was not too good and future plans of data centers with OpenAI seems to be delayed. 

AI is definitely advancing at a rapid pace but there is a lot of capital pumped into it and investors wants to see how that capital can translate into profits especially massive profits since AI has been marketed as world changing and will increase productivity with less labour. Tesla is gaining some momentum as it's autonomous driving is advancing although we don't know how long it will take for it to be fully rolled out. I am holding onto my position and it has been a long hold, SpaceX seems to be garnering for a record IPO in 2026 making Elon Musk reach crazy net worth. 

Bitcoin on the other hand is losing steam in its build up as we see the various bitcoin treasury companies slow their purchases except Strategy. I am cautiously optimistic for crypto as it feels like there is so much leverage and everyone is tired of it. Tired of how we were looking ahead for new highs but yet it crashes like nobody's business. Not really adding positions in Bitcoin at the moment although it is nice to pick some up at this price but no optimism or positivity yet. 

Enjoying the year end as time flies back quick and 2025 has been a crazy year, turning 30, thinking more about life and what I want to do in life. It's been a year of reflection and thoughts. As we slowly inch near the end of 2025, it is nice to see that I am advancing in terms of financial and health, feeling good and understanding that being healthy is the best thing ever, don't want to make myself too stressed over work and damage my health like how I did during Covid where I had some stomach issues. 

Understanding myself better next year as I enter 2026 is the main goal, enjoy the time with my family and friends, to be present for them. The portfolio is now slightly above $250,000 as compared to Q3 where it was at one point $300,000 so kinda sad but all right since we know how the market is, just scared and curious how low can it go. 

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Sunday, 12 October 2025

Leverage can double your gains but wipe you out too, what "dangerous" positions am I holding currently?

The huge crash on Friday has been making waves in the weekend as cryptocurrency market functions 24/7, there is no break and we are hearing stories of liquidations and huge capital loss due to perpetuals. Let's have some definitions first as I am also not familiar with terms. 

Leverage in investing refers to the use of borrowed money (debt) to increase the potential return of an investment. It is a strategy that allows an investor to control a larger position in a security or asset than their own capital would normally permit. Essentially, leverage acts like a financial multiplier, amplifying both potential gains and potential losses.

How Leverage Works

The core mechanism involves:

  1. Borrowing Funds: The investor borrows capital, usually from a broker (through a margin account), a bank (like a mortgage for real estate), or by using financial instruments like options and futures.

  2. Increased Exposure: The borrowed funds are combined with the investor's own capital (equity) to make a significantly larger investment. This larger investment is the total exposure.

  3. Amplified Outcome: Because the profit or loss is calculated on the total, larger investment amount, the return (or loss) on the investor's relatively smaller amount of original capital is magnified.

The degree of leverage is often expressed as a leverage ratio, such as 2:1 or 5:1. A 5:1 ratio means that for every $1 of the investor's own money (margin), they can control $5 worth of the asset (borrowing the remaining $4).

The Double-Edged Sword

Leverage is considered a high-risk, high-reward strategy:

  • Amplified Profits: If the investment performs well, the returns on the total position, after deducting the cost of borrowing (interest/fees), can lead to a much higher percentage return on the investor's initial capital.
  • Amplified Losses: If the investment moves against the investor, the loss is also based on the total position's value. This can result in losses that exceed the investor's initial investment, requiring them to put up additional capital or face a forced sale (margin call) of the asset to repay the debt.

My Position

I don't hold any leverage in my portfolio as I don't spend huge amount of time in the markets nor am I a trader but I do hold some cash secured puts on IBIT which I did to generate some capital to add onto my positions and since I know that Bitcoin is on an upside trajectory long term then if it ever drops that low, I will be willing to buy. 

I hold about 3 cash secured puts that I bought in June this year expiring on 20 March, 18 June and 18 June 2026 with strike prices, $49, $40 and $45. Based on this, $49x1754=$85,946.00, $40x1754=$70,160.00 and $45x1754=$78,930.00 so if Bitcoin drops to these prices, I would need to buy the shares. 

$49x100=$4,900.00, $40x100=$4,000.00 and $45x100=$4,500.00, if we were to reach the prices above then I would need to spend $4,500.00+$4,000.00+$4,900.00=$13,400.00 (USD) to cover the positions. To me, those are my riskiest positions because I am also holding a Bitcoin position and would then need to spend my cash position to buy the positions. Seeing this Friday crash, is scary and there is a possibility for that, never say never in crypto.  

I am experimenting with options, I don't like covered calls as most of my positions are for the long term and for holdings like Tesla and QQQ, it is definitely not recommended for covered calls unless you plan to take profit and close the position. I did covered calls for awhile and always found myself losing the upside. 

With cash secured puts, I find it useful only if you have some cash on the side, after trying it, I do find it a little waste of cash positions if they are huge as it might be better having it invested but overall all right with it as my cash secured puts are not a huge amount. I think as we get older then this might be a good tactic as your portfolio has grown and you also can afford to have a larger cash holding but of course, this is in the case of you not having much liabilities For now, I won't be adding any options positions in. I am observing buying options like a call or a put but not dabbling into it yet, just learning more about it. 

Let's wait and see how the equities market will open on Tuesday, the crypto market has been devastated so sharing some tweets here for the memories. 
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