## Investing for the Long Term!

As I was reading an article on Personal Finance, the following question came to mind: how much would a 10000 Rupees monthly investment in NIFTY since the year 2000 would be worth in December 2020? NIFTY is an index of Indian Equities and I was surprised by the ROI! Read on.

To estimate the value of a 10,000 INR monthly investment in the NIFTY 50 since the year 2000 until December 2020, we can use historical data for the NIFTY 50 index and a method called dollar-cost averaging. Keep in mind that this calculation is an approximation and does not take into account taxes, fees, or dividends received, which would affect your overall returns.

Using historical data for the NIFTY 50 index and the monthly closing prices, you can follow these steps:

1. Divide the 10,000 INR monthly investment by the closing price for that month to find the number of units (or a proxy of shares) purchased each month.
2. Keep a running total of the number of units accumulated over the investment period.
3. Multiply the total number of units by the closing price of the NIFTY 50 index in December 2020.

For example, using historical data from Yahoo Finance, the closing price of the NIFTY 50 in January 2000 was approximately 1,475, and in December 2020, it was approximately 13,981.75.

By investing 10,000 INR every month from January 2000 to December 2020, you would have invested a total of 2,520,000 INR over the 252 months. After calculating the number of units purchased each month and summing them up, you would have accumulated around 153.34 units (or a proxy of shares) of the NIFTY 50 index.

Multiplying the total number of units (153.34) by the closing price in December 2020 (13,981.75) gives you an approximate value of INR 2,144,250.69.

Please note that this is a rough estimate, and individual results may vary depending on factors like exact investment dates, fees, and reinvestment of dividends. Additionally, this calculation assumes that the monthly investments were made at the end of the month, which might not match your actual investment schedule.

Here are my trades for Mar. Sold a few naked puts and all of them expired. Got to keep the premium.

Sold the following puts on SPXL.

Mar 17th, \$59

Mar 24th, \$55

Sold the following puts on AMZN.

Mar 10th, \$88

Mar 24th, \$90

Mar 31st, \$90

Sold the following puts on OXY

Mar 24th, \$52

Sold the following on TQQQ

Mar 31st, \$24

All of them expired. I kept the premium!

## Here are my trades in Feb. Just a repeat of Jan!

Here are my trades for Feb 2023. Sold a few naked puts and all of them expired. Got to keep the premium.

Sold the following puts on SPXL.

Feb 3rd, \$65

Feb 10th, \$71

Feb 17th, \$58

Feb 24th, \$65

Sold the following puts on AMZN.

Feb 3rd, \$87

Sold the following on TQQQ

Feb 24th, \$20.50

All of them expired. I kept the premium!

## My trades for Jan 2023. I forgot…almost!

I have been getting a bit sloppy! Actually, I got a bit busy with classes. Here are my trades for Jan 2023. I have decided to trade a bit rather than investing for a couple of months. None of these naked puts got exercised. Hence, I got to keep the premium.

I sold the following puts on SPXL.

Jan 13th, \$58.50

Jan 20th, \$60

Jan 27th, \$63

Jan 27th, \$68

All of them expired.

## Back in Action!

In May this year, fearing that Putin may go crazy with weapons of mass destruction in Ukraine, I decided to stay away from investing. I was right, but for wrong reasons. I would file it under ‘got lucky’ column. So on October 27th, when Facebook (called META nowadays!) fell by more than 25% and lost about 80 Billion\$ in market cap, I thought I would sell some puts. I sold Oct 28th \$95 puts. Thankfully, META stayed above \$95 and I got to keep the premium. But by Nov 3rd, it fell to \$88. I’m watching it carefully even as it reaches \$113 on Nov 11th. I’ll make a decision about buying some this week. Facebook fell from \$350 to \$88! AMZN fell to \$85 from \$188 and GOOGL to \$83 from \$151.

## My trades for November 2021

First, I closed all my October trades on Nov 4th and booked my profits though the options were expiring in Jan. Why? I don’t trade on margin. I don’t want to go long either. So, back to selling naked puts! Here are my trades for Nov.

Transactions

Sold 10, Jan 22, SPXL 70 puts for \$0.90

Sold 10, Jan 22, RIVN 70 puts for \$3.30

Sold 10, Jan 22, RIVN 55 puts for \$1.45

Sold 10, Jan 22, PTON 35 puts for \$1.40

## My trades for October 2021

Per popular request, I’ll be posting my monthly trades hereafter. Though the request was for weekly posts, I’ll start with monthly for now. I traded only naked puts last month and here they are. Guess how much capital I need if all the puts are exercised? Guess how much profit I would make if none is exercised?

Transactions

Sold 10, Jan 22, FAS 65 puts for \$2.22

Sold 10, Jan 22, TQQQ 60 puts for \$1.70

Sold 5, Jan 22 TQQQ 65 puts for \$2.05

Sold 5, Jan 22 TQQQ 70 puts for \$1.65

Sold 5, Jan 22 TQQQ 70 puts for \$1.34

Any idea why Jan 22 TQQQ 70 puts were sold at different prices?

## Investing in SPAC is not for everybody. Tread carefully!

I said in the class I will explain how options differ from SPAC. Here it is.

SPAC (Special Purpose Acquisition Company) is a shell corporation with no current business operation but has identified/is identifying potential targets for acquisition/merger. Upon completing the M/A, the SPAC goes public and those who invested in the SPAC get IPO shares allotted by the company. Whereas options are contracts between two parties (the company is not involved) either to buy or sell shares at a particular price within a specific period. The shared are moved from one investor to another if the options are exercised. SPAC issue warrants to the investors to begin with. To read more about SPAC click on the image below.

## Can options trading influence valuation? Looks so, just as we discussed in PE class

Remember our discussion on how call and put volumes are used by some investors to measure sentiments? Investors who buy ‘out-of-the-money’ call options anticipate the underlying stock price to spike. Recenly Softbank bought \$4B worth call options on its holdings AMZN and MSFT. Many investor interpret this move as a buy signal on these equities and this may have led to spike in prices. This ends up escalating the valuation of these companies even though the underlying business models don’t justify these levels of valuation. Click on the image below to read an interesting article on this topic.