Financial Engineering Tips: Useful for both crypto and stock trading

Core Strategy: Go all-in + Buy some 'insurance' ______________________ 1. 'All in + Pair it with a Put' All in: If you're bullish on a sector (in this case, storage chips), put most of your funds into buying its stocks. Pair it with a Put (put option): It's like buying 'downside insurance' for your stocks. You spend a small amount (the premium) to buy the right to sell. If the stock price crashes, this insurance will skyrocket in value, offsetting your stock losses. ______________________ 2. 'If it crashes, sell the put and use the profits to buy more' What happened: The stock price really tanked, and your stocks lost value. How to fix it: But since you bought 'insurance' (the Put), it’s now worth a lot. You sell the insurance and make a big profit. Next step: Use the money you made from selling the insurance to buy more stocks at the lower price (buy the dip). This lowers your average cost and increases the number of shares you own. ______________________ 3. 'When it rallies, buy a cheap put with low IV for protection' What happened: The stock price is doing great. What is low IV: IV (Implied Volatility) is basically how 'expensive' or 'cheap' options are. When the stock price is steadily rising, options tend to be cheaper (low IV). What to do: While options are cheap, quickly buy a new 'insurance' (Put) to lock in your current profits and protect against any sudden pullbacks. ______________________ 4. 'Repeat the cycle' This is like a snowball effect: When it drops -> Insurance pays out -> Use the payout to buy more stocks at a discount. When it rises -> Stocks make money -> Spend a little to buy insurance for protection. Repeat this process. As long as the long-term trend is upward, this strategy helps you hold your position with a calmer mindset.