Mar 31, 20236 min
Hi Wealth Builders! 👋
We had a wonderful end to March with tech stocks taking the lead once again!
Heat Map📈
Here's this week's heat map:
What's Been Happening In The Charts?📊
SPY
The S&P500 is still holding strong with staying above its green support line. I actually added a couple of shares to my long-term holds this week. However, if you would rather wait a little bit longer before adding to your positions, you can see if the ETF is able to go back to the $415 level.
QQQ
I also added some shares of QQQ to my long-term positions since tech stocks made another new high. The rate of increase for the QQQ is much higher compared to the rate of increase in SPY. This indicates that Wall Street is now favoring growth tech stocks.
AAPL
AAPL has been on the rise again, which prompted me and my wife to buy some shares for our long-term holds. However, looking at the charts, there seems to be some resistance coming up, which is denoted in lime green. If we break above this resistance, I'll be adding more shares again.
HD
I also purchased more shares of HD this week since it looks like it finally broke its short-term downward trend.
I'm balancing my portfolio with this steadier DOW30 stock since it has a long history of dividend increases and strong revenue. Right now, HD has a 2.93% dividend yield!
MSFT
I also added a couple more shares of MSFT as we are still on a strong rise back up.
V
Visa broke out this week from its downward trend and I also added a couple of shares to my long-term holds.
WM
I'm keeping an eye out on WM and I'm planning on adding more shares in the near future. Again, I like to add these dividend-paying components to balance out my portfolio just in case we go through another rough period in the markets.
Steve's Trades
Many of you may have sold CSPs and your options have significantly decayed more than 50-80%. If so, you can consider buying your contracts back to lock in your profits and restarting a new wheel.
Others may have sold CCs and your shares were called away. Again, this is great news since you were able to collect the premium, capital gains, and potential dividends. You can also consider restarting a new wheel.
If you would rather keep you profits as cash for now, that's okay too. We are coming up to earnings season at the end of April and you can use the collected cash to see where you would like to reinvest into long-term holds.
1. SBUX Cash-Secured Puts:
SBUX broke out of its downward resistance this week and we may start to form a new trend. There may also be some support around the $100 level.
Expiration Date: May 5, 2023
Step 1: Have $10,000 of cash as collateral
Step 2: Sell 1 $100 strike put option (delta -0.31) for $192
Credit/premium received: $192
By placing this trade, we are willing to buy 100 shares at the strike price of $100 by expiration. If the shares are assigned to us, we can start earning premium from selling covered calls on this new position.
2. SBUX Bear Call Spread:
I also want to pair my CSP with a bear call spread just in case SBUX decides to take a breather from the rally this week. I also want to see if it can surpass its recent $110 high again.
Expiration Date: May 5, 2023
Step 1: Buy 1 $135 strike call option (delta 0.01) for $9
Step 2: Sell 1 $112 strike call option (delta 0.22) for $98
Step 3: Set a buy-stop order of 100 shares at $111
Credit/premium received: $98 - $9 = $89
If you decide to put on both of these trades, remember that the goal is to have SBUX stay between $100 and $112 and to let theta decay away from all the option contracts. And yes, you can always close your positions early when you have your contracts decay to around 50%+ to lock in your gains.
Ask Steve 🤔
Q: Hi Steve! Do you recommend money market such as SWVXX? The current 7-day yield interest rate is 4.58%. Let's say I'm conservative and not planning to invest into any particular stocks or ETFs but currently holding on cash, would it make sense to put the cash into a money market fund since it's doing pretty well? I'm thinking money market may be safe to secure some profit right now and once the S&P 500 drops even more, I can sell my money market funds and buy into the S&P 500. Thoughts?
A: Yes! Since interest rates are high, you can consider putting your money into a money market fund. You can even consider putting your money into a high-yield savings account. I'm currently using Wealthfront and I get 4.8% interest rate (by referring a friend). SWVXX currently gives around a 4.6% interest rate.
Q: When we talk about holding stocks for dividends, does having sell put options on that stock entitled for the dividends?
A: No. You will have to own the actual shares before the ex-div date to obtain dividends on the next payout date.
Q: You were right Steve. I bought too many hyped up stocks and call options in 2020 and my portfolio is still down more than 80%. I should have invested more into those dividend payers and sp500 stocks that you always talk about. Any way I can fix my portfolio?
It's okay. I've been here too when I first started and it's a painful lesson to learn. You can recorrect your portfolio by following the 30/30/30/10 allocation:
30% Dividend paying stocks and ETFs (the "boring" assets)
30% Growth (though I would still be more cautious with this portion right now and focus more on dividend payers and cash)
30% Wheels (to hedge your portfolio and make sure income is still coming in no matter what market direction it is
10% Cash/LEAPS during bull markets (make sure you alway have some cash on the side so you have options later on)
If you want to start simple, you can focus on buying ETFs like SPY or VOO right now. I know, they're "boring." However, this may help you reposition yourself with better grounding when you start to explore different assets in the future.
Keep your head up high. We all make mistakes in life. Make sure that we learn from these mistakes so we become stronger and more resilient in the future. Feel free to reach out to us any time. 🙂
📌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 Dashboard. 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.
📌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. If you need help, feel free to send us a message.
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.
Stay disciplined everyone! I know that people usually get excited with these rallies, but be mindful that there is still some uncertainty with the Fed and them raising interest rates. Also be mindful that we are getting close to earnings season at the end of April, which means that there are going to be some volatile weeks.
Have a wonderful weekend! 🙂
-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.