🔒 Premium Membership Positions - June 5, 2022

Hi Advanced Traders!

As you have read in the Standard Membership Positions this week, I am going to take an observer's seat this week and not place any trades at all. I want to observe where the markets go in the next couple of days, specifically if the broad indices start to make new breakouts or if the markets get rejected at certain levels.

If you are thinking of selling covered calls, you can consider setting up bear call spreads as your initial move instead. This way, if your underlying stock does not really move in price, you can still collect your premium without having to initially own 100 shares. If the stock rises, this may signal to you that institutions are putting their capital back into the underlying stock, which you can then convert your bear call spread into a covered call.

As a gentle reminder, I do prefer that we cover ourselves in case the stock rises towards the strike of our second leg. This means that if you are going to set up a bear call spread, you will want to have the intention of starting a new covered call trade on the stock.

Also, please make sure you are not selling any naked calls and not covering yourself as you may be subject to infinite realized loss. It is important that you set up your first leg (buy a call option) as collateral before selling your second leg. For every $1 ITM your second call option expires, there will be a $100 realized loss. Yikes!

As always, feel free to ask me or the team any questions via the Dashboard.

Happy trading!😀

Steve and the Call to Leap Team

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