Jun 5, 20216 min
Hi Everyone!
Whoa. We had an overall neutral, but volatile week, with us having a drop on Thursday and a sudden rally on Friday.
Here's a snapshot of SPY. It looks like we're testing our previous highs again. Will it break through next week?
Here's a snapshot of QQQ and it looks like it's trying to retest it's February highs.
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.
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.
SBUX
Not to alarm you but it looks like SBUX broke it's support line this week and couldn't get back up on Friday's rally. I would be a little more cautious if you want to start the Wheel on this stock because there might be a new trend forming in the next couple of weeks. If you already have a Wheel spinning for this stock, it's no worries. You can keep selling your calls at your original strike price. However, if you are thinking of starting a new Wheel, I might recommend sitting on the sidelines for now to see where the stock goes in the next couple of days/weeks. Again, it's really up to you in the end.
Here are some trade recommendations and see what fits your personal risk-tolerance:
MSFT:
Tuesday Open:$251.23
Friday Close:$250.79
Change: -0.18%
Starting a New Wheel: Selling a Cash-Secured Put on MSFT
- MSFT's Current Price: $250.79
- Capital needed: $25,000.00
- Sell at the Expiration Date: 2021-07-02
- Select the Strike: $250.00
- Premium you'll receive: $492.50
- Cost basis: $250.00 - $4.93 = $245.07
Starting a New Wheel: Selling a Covered Call on MSFT
- MSFT's Current Price: $250.79
- Capital needed: $25,079.00
- Sell at the Expiration Date: 2021-07-02
- Select the Strike: $252.50
- Premium you'll receive: $437.50
- Cost basis: $250.79 - $4.38 = $246.41
AAPL:
Tuesday Open:$125.08
Friday Close:$125.89
Change: 0.65%
Starting a New Wheel: Selling a Cash-Secured Put on AAPL
- AAPL's Current Price: $125.89
- Capital needed: $12,500.00
- Sell at the Expiration Date: 2021-07-02
- Select the Strike: $125.00
- Premium you'll receive: $262.00
- Cost basis: $125.00 - $2.62 = $122.38
Starting a New Wheel: Selling a Covered Call on AAPL
- AAPL's Current Price: $125.89
- Capital needed: $12,589.00
- Sell at the Expiration Date: 2021-07-02
- Select the Strike: $126.00
- Premium you'll receive: $301.50
- Cost basis: $125.89 - $3.01 = $122.88
AMD:
Tuesday Open:$81.01
Friday Close:$81.58
Change: 0.7%
Starting a New Wheel: Selling a Cash-Secured Put on AMD
- AMD's Current Price: $81.58
- Capital needed: $8,150.00
- Sell at the Expiration Date: 2021-07-02
- Select the Strike: $81.50
- Premium you'll receive: $271.00
- Cost basis: $81.50 - $2.71 = $78.79
Starting a New Wheel: Selling a Covered Call on AMD
- AMD's Current Price: $81.58
- Capital needed: $8,158.00
- Sell at the Expiration Date: 2021-07-02
- Select the Strike: $83.00
- Premium you'll receive: $224.50
- Cost basis: $81.58 - $2.25 = $79.33
NKE:
Tuesday Open:$137.85
Friday Close:$133.74
Change: -2.98%
Starting a New Wheel: Selling a Cash-Secured Put on NKE
- NKE's Current Price: $133.74
- Capital needed: $13,300.00
- Sell at the Expiration Date: 2021-07-02
- Select the Strike: $133.00
- Premium you'll receive: $334.00
- Cost basis: $133.00 - $3.34 = $129.66
Starting a New Wheel: Selling a Covered Call on NKE
- NKE's Current Price: $133.74
- Capital needed: $13,374.00
- Sell at the Expiration Date: 2021-07-02
- Select the Strike: $134.00
- Premium you'll receive: $430.00
- Cost basis: $133.74 - $4.30 = $129.44
PINS:
Tuesday Open:$66.00
Friday Close:$62.89
Change: -4.71%
Starting a New Wheel: Selling a Cash-Secured Put on PINS
- PINS's Current Price: $62.89
- Capital needed: $6,250.00
- Sell at the Expiration Date: 2021-07-02
- Select the Strike: $62.50
- Premium you'll receive: $282.50
- Cost basis: $62.50 - $2.83 = $59.67
Starting a New Wheel: Selling a Covered Call on PINS
- PINS's Current Price: $62.89
- Capital needed: $6,289.00
- Sell at the Expiration Date: 2021-07-02
- Select the Strike: $63.00
- Premium you'll receive: $296.00
- Cost basis: $62.89 - $2.96 = $59.93
SBUX:
Tuesday Open:$114.56
Friday Close:$111.99
Change: -2.24%
Starting a New Wheel: Selling a Cash-Secured Put on SBUX
- SBUX's Current Price: $111.99
- Capital needed: $11,100.00
- Sell at the Expiration Date: 2021-07-02
- Select the Strike: $111.00
- Premium you'll receive: $199.00
- Cost basis: $111.00 - $1.99 = $109.01
Starting a New Wheel: Selling a Covered Call on SBUX
- SBUX's Current Price: $111.99
- Capital needed: $11,199.00
- Sell at the Expiration Date: 2021-07-02
- Select the Strike: $112.00
- Premium you'll receive: $242.00
- Cost basis: $111.99 - $2.42 = $109.57
What's the Word on the Street?
Yeah, there is still some fear that the Federal Reserve may step back from its easy policy.
The May employment report came out on Friday and the lower-than-expected job gains reinforced that the Fed could continue to hold off on policy changes for the time being. There were 559,000 jobs added in May, while there was an expected 671,000.
Should you be worried as a long-term investor? Nope!
If we've gotten through some crazy events, like 9/11 and a pandemic, then an increase in inflation and interest rates should not be something that deters us from investing.
Stick to the plan. 👍
Apple News
Apple's Worldwide Developers Conference, or WWDC, is coming up next week. This is where Apple reveals the next operating system for the iPhone iOS 15 and will likely be the most important software update to come out of the conference. The iPhone is one of Apple’s top products, with more than a billion active phones in use around the world. The new iOS updates may determine how “new” people’s old iPhones will feel come fall. Remember, Apple's iPhone is no longer just a phone, but also a way for Apple to get their users into their growing services business.
There might be a chance that Apple's conference might spark a rally in the upcoming days as Apple's stock price is coming to the tip of a wedge. Apple looks like it's stay afloat on top of it's main green support line.
Again, I don't like to trade or invest based on news as I like to focus more on the fundamentals and revenue streams from companies. However, it's something to keep an eye out in the coming days. 👀
Only Invest In What You Understand
If you are brand new to the stock market, I understand that it can be an exciting world.
When we turn on the news or open our social media apps, we see a lot of hype surrounding particular investments that sound like it can turn us into millionaires overnight.
Don't be fooled.
I see this time after time where greed easily whispers to a lot of people. Let me tell you, many people will get burned by investing in the hype.
If you're considering investing in meme stocks like GME and AMC, you've been warned.
I strongly recommend that you stay with companies that are continually increasing their revenue and that you understand. These are the companies that are statistically safer to invest in, rather than stocks that can easily be pumped and dumped, and manipulated by institutions with large sums of money.
Becoming wealthy is a bit "boring," but you know what, it's the "boring" turtle that always wins the race.
Stay patient and disciplined. Be the turtle.
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.
Level 1 FAQ 🙋♂️🙋♀️
Have 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.
Have a wonderful weekend, everyone! 😀
-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.