Jul 2, 202111 min
Happy 4th of July!
Wow! The markets soared this week, especially with a lot of our favorite stocks retracing back up and even making some new all-time-highs!
Here's SPY:
Here's QQQ:
Here's DIA:
If you've been following us for a while, you should be seeing your wealth magnifying.
Welcome, New Members! 👋
If you just joined our wealth-building community, I want to say hi!
My team and I are super excited that you joined and we believe that if you follow our investing and trading strategies, along with using our tips to building your long-term wealth mindset, you will do wonders in the future and get to financial freedom much faster than you expected.
Take your time to go through the content on our site. We encourage you to first watch the Level 1 series, take all the quizzes, join our Discord, and explore our past content, such as reading at least 5 past membership positions and watching some of the Ask Steve videos.
If you have any questions, feel free to ask us. Our job is to help support you on your journey to financial freedom. ✌
Trade of the Week:
If your covered calls expired worthless this Friday, we recommend selling more calls at around the same strike price as before to collect more premium. If you were assigned your 100 shares from your cash-secured put, you can sell a call against your shares and convert your trade into a covered call trade.
Pay attention to the delta: You can always look at the delta of the call you are selling since the delta roughly approximates the probability of the price of the stock reaching the strike by expiration. If you see that the delta is 0.10, you know that there is roughly a 10% chance that the price of the stock will reach that strike price by expiration. Likewise, if you see that the delta is 0.20, you know that there is roughly a 20% chance that the price of the stock will reach that strike price by expiration.
Beginners: If you're a beginner, we recommend you starting off with selling cash-secured puts around 1-3 strikes OTM. This is typically a conservative starting point when starting the Wheel Strategy. If you have been using the Wheel Strategy for a while and have a more bullish outlook, we recommend starting your new Wheel by selling a covered call around 1-3 strikes OTM to not only receive the premium, but also make capital gains if you are called away at expiration.
Advanced: Since it looks like we are progressing forward in the markets, you can consider selling shorter dated OTM covered calls, around 2-3 weeks out. We would only recommend this to members if they've been trading the Wheel for a while and have a general understanding of how theta and delta work.
Here are some trade recommendations and see what fits your personal risk-tolerance:
MSFT
Monday Open: $266.19
Friday Close: $277.65
5-day change: 4.3%
Starting a New Wheel: Selling a Cash-Secured Put on MSFT
- MSFT's Current Price: $277.65
- Capital Needed: $28000.00
- Sell at the Expiration Date: 2021-07-30
- Select the Strike: $277.5
- Premium you'll receive: $630.00
- Cost Basis: $277.50 - $6.30 = $271.20
Starting a New Wheel: Selling a Covered Call on MSFT
- MSFT's Current Price: $277.65
- Capital Needed: $27765
- Sell at the Expiration Date: 2021-07-30
- Select the Strike: $280
- Premium you'll receive: $750.00
- Cost Basis: $277.65 - $7.50 = $270.15
AAPL
Monday Open: $133.41
Friday Close: $139.96
5-day change: 4.9%
Starting a New Wheel: Selling a Cash-Secured Put on AAPL
- AAPL's Current Price: $139.96
- Capital Needed: $14000.00
- Sell at the Expiration Date: 2021-07-30
- Select the Strike: $139
- Premium you'll receive: $330.00
- Cost Basis: $139.00 - $3.30 = $135.70
Starting a New Wheel: Selling a Covered Call on AAPL
- AAPL's Current Price: $139.96
- Capital Needed: $13996.00
- Sell at the Expiration Date: 2021-07-30
- Select the Strike: $140
- Premium you'll receive: $378.00
- Cost Basis: $139.96 - $3.78 = $136.18
AMD
Monday Open: $86.38
Friday Close: $94.70
5-day change: 9.63%
Starting a New Wheel: Selling a Cash-Secured Put on AMD
- AMD's Current Price: $94.70
- Capital Needed: $9500.00
- Sell at the Expiration Date: 2021-07-30
- Select the Strike: $94
- Premium you'll receive: $408.00
- Cost Basis: $94.00 - $4.08 = $89.92
Starting a New Wheel: Selling a Covered Call on AMD
- AMD's Current Price: $94.70
- Capital Needed: $9470.00
- Sell at the Expiration Date: 2021-07-30
- Select the Strike: $95
- Premium you'll receive: $465
- Cost Basis: $94.70 - $4.65 = $90.05
NKE
Monday Open: $153.92
Friday Close: $159.74
5-day change: 3.78%
Starting a New Wheel: Selling a Cash-Secured Put on NKE
- NKE's Current Price: $159.74
- Capital Needed: $16000.00
- Sell at the Expiration Date: 2021-07-30
- Select the Strike: $157.5
- Premium you'll receive: $478.00
- Cost Basis: $157.50 - $4.78 = $152.72
Starting a New Wheel: Selling a Covered Call on NKE
- NKE's Current Price: $159.74
- Capital Needed: $15974.00
- Sell at the Expiration Date: 2021-07-30
- Select the Strike: $160
- Premium you'll receive: $363.00
- Cost Basis: $159.74 - $3.63 = $156.11
PINS
Monday Open: $77.33
Friday Close: $79.31
5-day change: 2.56%
Starting a New Wheel: Selling a Cash-Secured Put on PINS
- PINS's Current Price: $79.31
- Capital Needed: $8000.00
- Sell at the Expiration Date: 2021-07-30
- Select the Strike: $79
- Premium you'll receive: $497.00
- Cost Basis: $79.00 - $4.97 = $74.03
Starting a New Wheel: Selling a Covered Call on PINS
- PINS's Current Price: $79.31
- Capital Needed: $7931.00
- Sell at the Expiration Date: 2021-07-30
- Select the Strike: $80
- Premium you'll receive: $510
- Cost Basis: $79.31 - $5.10 = $74.21
SBUX
Monday Open: $112.93
Friday Close: $114.97
5-day change: 1.8%
Starting a New Wheel: Selling a Cash-Secured Put on SBUX
- SBUX's Current Price: $114.97
- Capital Needed: $11500.00
- Sell at the Expiration Date: 2021-07-30
- Select the Strike: $114
- Premium you'll receive: $245
- Cost Basis: $114.00 - $2.45 = $111.55
Starting a New Wheel: Selling a Covered Call on SBUX
- SBUX's Current Price: $114.97
- Capital Needed: $11497.00
- Sell at the Expiration Date: 2021-07-30
- Select the Strike: $115
- Premium you'll receive: $283.00
- Cost Basis: $114.97 - $2.83 = $112.14
Ask Steve
Many of you have requested that we have our weekly Ask Steve videos put in text form since it's easier to read. We thought we would give it a shot. Remember that the questions asked here are the questions we gather from a question box located on our Dashboard. We typically only like to post top questions that we believe will help our wealth-building community:
Samer
Q: How do you know what smart money is investing in? How do you know where they are putting their money?
A: Great question! You can check to see which institutions are investing in certain stocks by going on sites like Yahoo Finance and checking a stock's holders. Remember that in order to move a stock like MSFT, it will take a great deal of capital. The people who typically have this amount of money are large institutions with billions of dollars. When we see big companies in the S&P500 move up, it typically tells us that institutions are putting more money back into the markets.
John
Q: Have you done strategies trading on margin doing cash secured puts or covered calls using the philosophy of Call to Leap? Would you recommend it? Or is it very risky and it's not worth it to try
A: Great question! Yes, you can use a little margin to spin your Wheels. However, we would still obey our guidelines outlined in our Level 3 (Premium) series where we don't use more than 50% of our margin. We would also only do this if you are experienced in the markets and that the stocks in your portfolio are fundamentally and technically strong. Remember, the more margin you use, the more risk there is associated. If you are a beginner, we would recommend to not use margin at this point.
Thomas
Q: I understand how it is more optimal to buy back and roll out cash secured puts if the stock goes down. I want to know if it is also ideal to buy back and roll out cash secured puts if they go up in value, or if this would decrease the unit rate. Thanks!
A: Great job on understanding that concept! So it won't be ideal because if the underlying stock price rises dramatically and you roll out at the same strike price you had previously, you would receive a lower premium for that trade. Instead of buying back and rolling out a CSP when the underlying stock rises dramatically for less premium, you can consider trying this next option: "Buying to close." If you want to restart your Wheel, you can then choose a higher strike price and sell at a further date. You would essentially be "rolling up and out," since you are rolling up in strike price and rolling out in expiration.
Mindy
Q: Hi Steve! I sold a CSP on AAPL for $130 for a $300 premium. Right now AAPL is around $135 and the put option is around $20. What should I do?
A: Awesome question! Since AAPL went up, the value of your put option went down. This means that if your put option has decayed around 80% of it's original value, you can buy to close your option to lock in your profits. You can then consider restarting your Wheel.
Jane
Q: My account has went up in value around 12% or $5,000 in two months. Is this normal? I'm not complaining, just curious.
A: Thanks for your question. Since we were in a lull in the markets for the past half of the year due to Wall Street having fears with rising interest rates, tax hikes, and rising inflation, it seems that Wall Street is putting their money back into our favorite companies again. Looking at historical data, many of the stocks we choose tend to grow anywhere between 20-50% within a year. Again, be mindful that past performances don't necessarily indicate future performance. Our goal for members is to make around 2-5% per month, depending on what market conditions we're in.
Veronica
Q: Hi Steve! Just to make sure I'm compounding my portfolio right, I'm supposed to use the premiums I make each month and buy more long term stocks? And I'm supposed to deposit more money into my portfolio to buy long term stocks too or use that to fund my covered calls. Is that right? By the way, my husband and I have been following your program for about 4 months and have seen our accounts grow so much!
A: That's a great question, Veronica! Yes, you want to refuel your portfolio by using your premiums to purchase more long-term holding stocks. You are also correct that you want to keep depositing more money into your brokerage account as part of your wealth building discipline. I'm so glad to hear that you and your husband are growing your wealth together as a team! Keep at it!
Submit Your Questions 🙋♂️🙋♀️
Have any other questions? Before asking me and my team, feel free to check out our Level 1 FAQ. This FAQ is located on the Level 1 page. You might find what you're looking for. 😊
If you do have questions, make sure to ask them on our Dashboard, rather than asking us via email. We also encourage you to watch all of the core video content and some of the past archived videos, read past Membership Positions, and take all the quizzes before sending us your questions.
Technical Analysis 📈📉
Looking at the charts for many of our favorite stocks, it looks like we are moving higher. What does this tell us? This shows us that many institutional traders are willing to put their capital back into the markets after our neutral market that we've been having for the past 5 months. Stocks often move based on a "monkey see, monkey do" psychology. When institutions see other intuitional buying, they often will follow suit and their algorithms will get triggered into purchasing more shares. If you are part of the Premium Membership, you will start to realize that when stocks move higher and institutional traders have bearish spreads set up, these traders will have to buy shares to cover themselves, which in return pushes the stock price even higher.
PYPL:
PYPL is one of my long-term holds in my portfolio and looks like it's still staying above it's trendline. I think the stock is going to retest it's previous highs of around $310 in the near future.
EL:
EL is another one of my long-term holds and the stock just made another all-time-high this week. This is great company that has demonstrated to Wall Street that they have solid footing with selling their products in the digital space.
PINS:
PINS had a huge run up back in April and a dramatic correction due to their projected lower MAU (monthly active users). However, we still believe the stock is going to go higher since the company's fundamentals are still strong with their rising top-line revenue. If you have been trading this stock like me, you can see that patience pays off. We see this stock retesting it's all-time-highs of around $90 soon.
V:
V is a "Steady Eddy" stock and is part of my long-term holds. It's still holding above it's upward trendline and I'm still adding more shares to my positions.
AAPL:
AAPL typically has a habit of running up into it's earnings. Remember that they are going to report at the end of this month. I believe AAPL is about to break out of it's triangular wedge and surpass it's previous all-time-highs of $145. And yes, I am still running my Wheels on this stock.
AMD:
AMD is another great Wheel candidate since the stock has been in consolidation for a while and stays between a neutral range.
MSFT:
MSFT is still trading between it's upward trendline. I have shares as long-term holds in one account and shares to run the Wheel in another account.
SBUX:
SBUX had a huge run up for the past couple of months and now seems to be in consolidation ever since May. I do see this stock still trending neutrally in the near future, which makes it another great Wheel candidate.
Earnings 📑
That's right folks. Another round of earnings are coming up towards the end of July. If you are trading the Wheel Strategy, we recommend that you keep these earnings dates in mind. You'll start to notice that your premiums are going to get slightly bigger since the extrinsic portion of your options will be inflated from the higher IV.
Remember that at Call to Leap, we only invest and trade in stocks that have strong fundamentals and that we understand the companies we invest in. We never invest based off of hype because this is the quickest way to lose money and to damage your wealth mindset. We want to see the stock market as a vehicle to grow wealth, not a gambling ticket.
Hitting Your Goals 🎯
It's the beginning of July and I wanted to check in to see if you are still contributing money into your brokerage accounts. Remember that one of the wealth habits we teach is to pay yourself first. If you consistently do this each month or week, you will most likely see your portfolio compound quickly over time.
Join Our Discord 💬
Investing, trading, and building wealth was a lonely journey for me. This is why my team and I created a Discord group for you and the other members to shares ideas and support one another. You don't have to go through it alone as we're all here to help. 😉
Make sure to check it out on the bottom of your "Dashboard" and follow the instructions on how to sign up. Coming from a teacher's perspective, I believe it's important to engage in conversations with people who are also seeking to reach financial freedom.
Remember that we are a community of wealth builders at all different levels, so be positive, kind, and helpful to others, so we can help each other get to financial freedom much faster.
Happy One-Year Anniversary At Call to Leap! 🥳
I can't believe it was last year that my team and I started Call to Leap. We want to thank all of you who have been with us ever since the beginning. We are always so encouraged by your uplifting, positive messages and your determination and patience to get to financial freedom. Not only do we love seeing all of your portfolios grow, we love hearing about how you're all developing positive wealth habits each day.
Cheers to another amazing year! You guys are all amazing! 🥂
-Steve and the Call to Leap Team
The following article is strictly the opinion of the author and is to not be considered financial/investment advice. Call to Leap LLC and the author of this article does not claim to be a registered financial advisor (RIA) or financial advisor. Please visit our terms of service and privacy policy before reading this article.