$100k Stock Options Trading Challenge | Ep. 2

Watch Part 1: Robinhood $100k Stock Options Challenge!

In part two of my $100k Stock Options Trading Challenge, I show you my trades with GameStop, Tesla, Zoom, and more. I was able to break $10,000 since episode 1, but was I able to keep it?

Back story

It’s been over two months since I kicked off my Robinhood stock options challenge, where I attempt to take my account that hit a low of $364 in November and trade my way to $100,000. Certainly not an easy task, but I enjoy a good challenge.

And just a reminder that this is purely for your own entertainment. In general, this is not a good way to trade or manage your bankroll – really, it’s a good way to blow up your account. So please, just watch, laugh at me, whatever – but don’t trade like I do here.

update

At the end of November, my account was at $6,480. I mentioned I would look to WallStreetBets to source some trade ideas. I mentioned how I was looking at entering a trade on GameStop. Now this was back in November, and I think we all saw what happened in January. So did I take my $6,480 and load up on GameStop options expiring at the end of January to quickly complete this challenge?

Unfortunately, I did not. On December 1st, I did buy five GameStop call options with a strike price of $30, but the expiration was January 15th. It moved against me pretty quickly, and I wasn’t super confident in the play, so I actually sold it on December 1st for a small loss.

I decided to try again on December 28th, this time four contracts with a strike price of $22 and still, an expiration of January 15th. These contracts were $287 apiece.

Unfortunately, I wasn’t sure if there would be a squeeze at this time, so I sold it on January 6th for 45 cents each, taking a loss.

And this is a good lesson on why time on a contract is so important. If I would’ve bought contracts expiring in February, sure, they would’ve been more expensive, but I would’ve had more time to be right. GameStop did start pumping up around January 13th, but of course, I had no way of knowing. If I had another month on the contract, I wouldn’t have to worry so much about it expiring worthless and could’ve comfortably held much longer.

These four contracts that I bought for $287 each would’ve hit a high before expiration of $1,915 each – or $7,660 total.

Now let’s pretend that I bought the same contracts, but expiring on February 19th instead of January 15th. I could’ve held in time for the squeeze to occur, and my contracts would’ve gone from a couple hundred apiece to a high of $35,771 each, or $143,084 in total.

Ah, the power of hindsight trading. So instead of completing this challenge and making mad tendies, I did the opposite. I’ll get to more GameStop later, but now let’s talk about some of my other trades.

I made a lot of trades in the past couple of months, and most were pretty unremarkable, so I’ll just cover some of the bigger ones.

I was feeling bullish on Tesla and since it’s capable of making such huge moves, I thought it would be a good play for this challenge. On November 30th, I bought a Tesla $620 call expiring that Friday. This is a risky play because if Tesla doesn’t move quickly in the right direction, this contract will lose money really fast. But unfortunately, Tesla sold off more, and I decided to cut the trade for a 30% loss.

I tried a handful of more plays with some more options with companies like Apple, Aphria, AMD, Palantir, Netflix, and Salesforce. I made a video about Support and Resistance levels (here), so when I’m looking to enter a trade, I look at the company’s chart, look for support and resistance levels, and take into account any recent news and current price movement.

Unfortunately, most of these trades didn’t work out well for me at all, and my account had bled out to under $4,000.

I did decide to try Tesla again and this time held it over night. I was able to make a nice profit selling at open the next day.

One thing that can be tough when trading options is not knowing whether you should hold a contract over night or not. One thing I recommend doing is checking out the site OptionsProfitCalculator. It looks like something from 20 years ago, but it works pretty well. You select your contract, and then, it will show you a chart of potential returns on your contract based on the day and the price.

So if you have a Tesla contract expiring on Friday and today’s Monday, do you want to hold it over night since the contract will lose value the closer it gets to expiration? Well, here we can see that Tesla is currently at $863, and tomorrow if the price doesn’t really change, we will lose over 10%. But if we think it could pump all the way up to $880 tomorrow, we would make almost 45%. So this can be a good way to visualize the pricing of your contracts over time.

Other than Tesla, most of my contracts lost a lot of value and, again, knocked my account down. I did think that Amazon was waiting to breakout after doing a whole lot of nothing. But since Amazon contracts are so expensive, I decided to do a Call Debit Spread.

In this instance, I would sell a call contract with a $3,300 strike price, and then, I would buy a call contract with a strike price of $3,295.

Now, a normal call contract would cost $8,055. Since I don’t have that much, I can sell a contract to open a trade to collect premium and offset the cost of the call contract. It gets a little complicated to explain, but it let’s me take part of Amazon’s upside without needing so much capital.

I bought two of these spreads for $330 total. I ended up selling it 22 days later for a profit of $118, so not the most exciting profit, but it was a good return on my money and it’s a way for smaller accounts to get in on the action of companies like Amazon.

Another play that worked out… I bought a put on Zoom for $950 and sold it the next morning at market open for a profit of $290.

My account fluctuated in the $3,000 to $4,000 range for awhile, and then, I finally caught a good trade.

On January 7th, Tesla was looking strong at market open. After it retraced, I waited for more buyers to come in to give me confidence it would keep going up. When they did, I decided to buy two call options with a strike price of $900, expiring in two weeks when the share price was $797.

These contracts weren’t cheap – I spent $1,870 on them. But, Tesla had a great day and closed with a share price of $816. The strength continued after hours and pre-market and into the next day. That next day, my contracts were up over $4,000. I did decide to sell one of my two contracts to lock in some profit.

Later in the day, my portfolio broke $10,000, which felt like an amazing milestone to hit in this challenge.

When Tesla dipped, I decided to get another contract – this time with a strike price of $1,000, but with an expiration of January 29th to give Tesla more time to move.

And, this was my mistake. Sometimes, when I get a great trade like this, I’ll think it’ll keep going and double-down. Most of the time, it doesn’t, and I end up giving back profit.

That’s what happened here. Tesla couldn’t keep the momentum going, and this contract ended up going to 0.

A few other bad trades dropped my account from it’s once-glorious $10,000 to an abysmal $1,000.

I’m pretty disappointed in myself. It’s clear I should’ve taken my profits and then re-assessed things afterwards. Trading does become easier with more money because you just have options… no pun intended. But, you can buy contracts with higher premiums, you can let trades run longer without worrying so much about your balance dropping too low… it’s just a better situation to be in, and unfortunately, I didn’t stay in the 5 digit club very long.

Then, the whole GameStop squeeze happened. On January 25th, I decided to use my remaining balance to buy 12 shares at $98. GameStop hit a high of $483 that week, and to be honest, I was not paying any attention to Robinhood, because I had way more shares in my TD Ameritrade account which had all of my attention.

My account climbed back up to $6,475 and obviously, I should’ve sold…. But I didn’t. I ended up holding the bags and sold on February 4th for $58.50 per share.

That’s twice now in this video that you’ve seen me lack discipline by not taking my profits. This is exactly what you don’t want to do. Don’t be like me. When you’ve hit your profit target – maybe that’s 30% or 50% on a trade… take your profits! Then, you can re-evaluate the market once you’re out of the trade.

I don’t know what it is about trading on Robinhood – I just have a hard time staying disciplined with it. In my main brokerage account on ThinkOrSwim, I have a much easier time getting in and out of trades and have had wayyy more success there than over on Robinhood. Robinhood has always been pretty crappy with trading options, and, of course, their handling of the GameStop fiasco didn’t help them out. I may consider moving this account out of Robinhood and into something like Webull, but we’ll see.

Where I Stand

Throughout the past couple of months, when waiting for a trade, I would park some cash in Bitcoin. Even though this is an options trading challenge, the real goal here is to make money, so right now, I have about $400 in Bitcoin, which has made me $135. I also spent $2.50 on Dogecoin – because why not – and it’s now up 570%.

My overall portfolio is down in the $1100-range, so I need to trade carefully. I noticed in the past, I tend to take a shotgun approach and enter maybe 3 or 4 contracts with different tickers, so instead, I plan to look for one solid, high conviction setup to enter and just take things one at a time like that.

In my last video, I mentioned I was going to source my ideas from WallStreetBets, but since it exploded, I don’t think I’ll find many worthwhile trade ideas there. Instead, I’ll go through my usual list of stocks until I find a setup I like.

One other tool that I use is a site called Tradytics. It shows you option flow – which essentially shows large orders of contracts that come in throughout the day. There are a bunch of other features as well with some AI tools and other fun stuff, so sometimes before entering a trade, I’ll look up the ticker on Tradytics. This will show me if the big orders of contracts are bullish or bearish, what strikes and expiration dates they are purchasing, etc. There’s also some scanners, so you can find interesting trade setups as well.

You can use some of these features for free, but for all of the data, it’s $49 per month, so it’s probably best if you are a more serious trader who wants live options flow. I put my referral link in the description of the video above.

Final Thoughts

You’ve seen me give back about 9 grand in this video, so I probably won’t do another update until I break $10k or I blow it up completely… but I have yet to blow up an account trading stock options, and I’m certainly not looking to start now.

Do me a favor and hit that thumbs up button on this video to encourage me to keep this going and consider subscribing if you haven’t already.