Trade Recaps from this Past Week (the Good and the Bad) - Educational Review
A Review of realized transactions
Hey Everyone -
It is a very exciting time in our Community as we are going through numerous upgrades in terms of adding more education, more advanced setups, and more direct ideas.
Many folks messaged me on Instagram letting me know they enjoyed the piece I wrote on Intraday scalping. I’m happy to hear this - there is much more to come. Slowly but surely, I will be transforming our Community on Substack to have that of a “Course” experience, where there is the powerful combination of:
The Direction of our Community: Evergreen Educational Content + Implementation
I know that many of my readers may be on the Beginner/Intermediate level in terms of the investing experience spectrum, so more of my content going forward will also be education-based to help get you further along in your journey.
Please share my content with your network as it empowers me to help more good people like yourselves. And if you’re a new reader, come join my list below.
Other topics I will be writing about in the future will include items such as:
How to analyze companies that have potential and do our best to avoid companies that may present trouble to our portfolio
How to learn Intermediate-Term Investing on top of Long-Term Investing
Foundational Guide to Selling Puts & Buying Calls
When is it appropriate to use Direct Shares vs. Options vs. Futures (ES/NQ)
Execution topics such as Scaling-in and Scaling-out
And much more.
These are all written content pieces that I will be creating so that Members can learn like in a “course” setting in their spare time - all the while - we continue to find opportunity in the markets when a good setup appears.
Let’s talk about this past week - ideas that were favorable to my plan and those that have been unfavorable.
Although I do not usually do trade recaps, if this education for Members is valuable, I can do more of them in the future.
I also share so that public readers understand a portion of my thought process as I navigate execution.
All companies I trade use the methodology I describe in my DCF Model Conclusion Studies to outline a plan: https://larrycheung.substack.com/t/dcf-modeling-fundamental-analysis
Because DCF Conclusion Studies are extremely time consuming to write, on companies that I like/guide upon but don’t have the capacity to share a full write-up, I give Focus Levels for Scale-In Entry, Expected Size of Move (Upside Target/Limit Sell Order), and Risk Parameters (Stop-Loss if one is needed). This is the most time-efficient way for me to share an Actionable Idea.
Working in our Favor
Idea 1: Pinduoduo
Folks know that I really like PDD Holdings and that I had been scaling into the February-March dip from 130, 120, and 110 after we had an earlier exit at 150 at the beginning of the year. We had a first target of 140-150 (Limit Sell Order) on this name and After Earnings, my Limit Sell Order on PDD got filled. Limit Orders are extremely important when trading volatile names.
Now that it’s retraced back to the 125 area, I’m adding back in again slowly.
Original 140-150 target was achieved.
Idea 2: Micron
On Micron, I shared publicly on Twitter that I liked this name at 95-96 and that I believed it was going past 100. Because it was an earnings play and I wanted to be on the safer side, I sold puts at strikes 87-89 on it to see if I could get IV (implied vol) crush.
MU soared after earnings, and the puts expired worthless and I was able to collect full premium on it. I will write a guide on Selling Puts for Members in the coming months.
Although Calls would have made me significantly more, I needed to balance Probability with risk along side profit potential.
Idea 3: Lululemon
On Friday, I gave another free idea to my public friends that I believed LULU 0.00%↑ would get back to 405-410 when it was around 395.
I played it conservatively and sold 0DTE (zero days till expiry) Puts out of the money during the midst of the heinous selloff. When LULU bounced back intraday, all the Puts dramatically declined in value.
Actually, my girlfriend and her mom made more than I did on LULU when I told them about it Friday morning (same time as my Tweet on it). They bought direct shares in pretty decent size in the 390s which accelerated in value as LULU reclaimed 408 whereas my upside was only limited to Put premium sold.
Idea 4: Broadcom
I’ve shared with private Members in our previous Substack letters and private Whatsapp group that I liked Broadcom as it approached 1100-1200. Its swing low was 1250, and I looked for consolidation before entry.
AVGO was a small position, but has worked in our favor so far.
I have trimmed one at 1370. But will hold the rest for now.
Idea 5: ES & NQ Intraday Scalps
Monday-Thursday on Whatsapp, I give ES & NQ (S&P 500 and Nasdaq-100) levels in my pre-market note which I directly trade myself. Those levels were worked for me this week. I made about ~$1000 this week from scalping the levels I provided.
As part of my methodology to reinvest intraday profits into long-term positions, I will reinvest that into 2 shares of QQQ which I’ll hold forever.
Just a reminder that scalping is a skill that takes a while to learn and requires a certain type of personality - which is why I offer education on this in my Community. It is a skillset that complements long-term investing, and is not designed to replace it.
I will do more education on this topic along with other topics related to long-term investing.
Unfavorable Setups/Ideas for me
Adobe: I had a Limit Order Sell on Adobe at 525 (would have been a decent +$500 trade) acquired from 490 post-earnings selloff. However, the stock’s recovery peaked at 523 and I was unable to close the position until it hit my Stop at 500. A missed opportunity, in my view. Closed at +120.
Nio: I had an opportunity to close out my NIO calls at a 15% profit when it went in-the-money a few weeks ago. However, I viewed 15% profit on calls as too little and decided to hold the position. NIO has languished, and I closed my calls at -50% stop-loss. Loss was about -260 on NIO.
Starbucks: As Twitter followers may know, I gave a favorable opinion on Starbucks about a month ago and my Calls had gone up 30%+. Same situation with NIO - I didn’t close out the Calls in a timely manner and now they will expire out of the money. Loss was about -370 on SBUX.
Alibaba: My one Alibaba 75 Strike call had put me at a 15% profit at some point last week. I looked for more, didn’t get it, and closed the call at a -30% loss. Loss was about -150 on BABA call.
Dollar Tree: I was looking for a bounce on Dollar Tree post-earnings collapse and bought one call with a 3-month expiry. The stock did not do much after and theta decay took its toll on the option and I closed out at -35% on this one. Loss was about -140 on DLTR.
From the above real examples which I share for transparency, we can see that Exit is just as important as Entry.
In many of the situations where I took an options position (Call) and guided it for members, most of the time, the Call appreciates in value first.
Key Point: Had I taken a conservative win in the situations above, I might actually not have lost on any of the positions above because my entries were solid.
However, because I didn’t close them out fast enough myself - it didn’t matter that my entry was good. Theta decay and mean-reversion will swing a profit to a loss very quickly.
This is why I always share my thinking with members that when it comes to a trading position - especially Long Options (Calls or Puts) - there is almost no reason to not take profits on the way up.
Lesson here? Doesn’t matter how small the gain is. A gain is a gain. Once seen, set a Stop and protect yourself.
Overall though, the 2 core formulas below will aid in profitability:
Win Rate > 60%
Average Gain > Average Loss
I will have more ideas to share in the coming week.
I will also share more educational pieces to help my members build a stronger background and a stronger process.
I am determined to have the opportunity to help you find more profitable setups even at these market highs.
In the background, I am brainstorming new ways/formats to communicate my implementation in Stocks/Options/Intraday.
It’s an exciting time for our Community, and I want you to engage and be a part of it.
Although it is ambitious, I will do my best to aim to help our Community find 1-3 solid/profitable stock ideas per month.
I consider a stock idea really solid/profitable if it sees a 2-5%+ gain from entry to exit within a 30 day window. After all, Cash yields 4% - a year.
Sincerely,
Larry
P.S. - Many members from the past who had a grandfathered rate who want to come back asked me if they can get their old pricing back. If you’ve been with me for 3 months or more in the past and want to return, send me a message on Substack with your email address. I’ll get you back in at your former pricing on an annual membership. This only applies to previous folks who were with me in 2022-2023 as that type of loyalty has sincere value to me.