Feb 184 min
Updated: Feb 20
by Ben Weiss, for the Call to Leap Team
Ben’s trades this week
All wheels are in motion...I didn't roll out or close any wheels this week as they still have decent time value left in them, however I did have my AMZN covered call at $155 strike get called away from me. I originally sold that call with an optimistically out-of-the-money (OTM) strike back when AMZN was trading around $148. Then earnings happened and the rest is history. The stock jumped up to ~$170 and has stayed there since. Thanks to the Wheel Strategy, I don't mind those shares being called away from me. I'll receive $15,500 for the assignment which I'll look to deploy next week.
Two LEAPS forward, one step back...As Steve and I discussed on Discord this week, I'm holding strong onto my GOOGL LEAPS even though the stock initially climbed before taking a bit of a beating with investors reacting to news about OpenAI developing a competitor to Google's search platform. We specifically buy LEAPS calls instead of near-dated options because they give us lots of time—several quarters if needed—to be right on our thesis.
Trade 1: GOOGL cash-secured put (CTL Level 1)
Expiration Date: March 15, 2024 (a "monthly" expiration)
Step 1: Have $14,000 cash as collateral
Step 2: Sell 1 $140 strike put option (delta 0.45) for $3.20/share
Credit/premium received: $320/contract (minus fees and commissions)
Thoughts: With GOOGL slipping later in the week, I was debating between selling at the $140 and $145 strike prices. I am still broadly bullish on GOOGL though $140 would be the more conservative choice currently.
Trade 2: CMCSA cash-secured put (CTL Level 1)
Expiration Date: April 19, 2024 (a "monthly" expiration)
Step 1: Have $4,000 cash as collateral
Step 2: Sell 1 $40 strike put option (delta 0.36) for $0.97/share
Credit/premium received: $97/contract (minus fees and commissions)
Thoughts: I chose to go out further to the April expiration on this option to collect more extrinsic value. With the stock recently retracing back down, we'll look to see if it bounces back up and gives us an opportunity to close out early.
Trade 3: TQQQ cash-secured put (CTL Level 1)
Expiration Date: March 15, 2024 (a "weekly" expiration)
Step 1: Have $5,000 cash as collateral
Step 2: Sell 1 $50 strike put option (delta 0.17) for $0.88/share
Credit/premium received: $88/contract (minus fees and commissions)
Thoughts: With a bit of a stall to the broader bullish trend this week, I was debating between choosing the $50 and $55 strike prices, but went with the slightly more conservative $50 to give the ETF more room to fluctuate. A higher strike, possibly $52 or $55, would certainly pay a higher premium but is riskier of course. As always, tweak these positions to whatever you feel comfortable with and fits your risk tolerance.
🚨Caution: If you're not familiar with TQQQ, it's an ETF that follows the movement of the Nasdaq index fund QQQ. However, because it's 3x leveraged, it will increase or decrease 3 times the movement of QQQ. By nature, trading in leveraged ETFs can be highly volatile and isn't for everyone! I like trading TQQQ because of its much lower share price compared to QQQ, making it a more accessible way to trade in the broader Nasdaq index. Please reach out with any questions!🚨
Investing like clockwork...As always, I held true to the dollar-cost average (DCA) method and bought a share each of SPY/VOO and QQQ. The DCA method allows me to check my uncertainty at the door about whether now is a good time buy or not. I like to stick to my schedule and buy a small number of shares regardless of the markets movement that week to keep me on track long term.
Steve's trades this week
Wait for it...I'm choosing to "hold onto my chips" this week and wait to see how the market digests the CPI report from this week before opening any new options positions. I'll be looking to see if GOOGL bounces up early next week from its short-term decline. If so, I'm eyeing selling a CSP around the $138-140 strike.
In my long-term bucket, I bought 5 shares each of SPY and QQQ. I saw the slight pullback in the market this week as a good opportunity to buy some shares at a relative discount.
As always, tweak these positions to whatever you feel comfortable with and fits your risk tolerance.
Friendly reminders from Steve:
Let your money work harder for you...
I'm also getting a 5% APY by having my cash sit in my Fidelity account as I sell my cash-secured puts. Here's the link if you're interested in getting started!
Manage Your Cash Against Rising Costs | Compare Our Rate | Fidelity
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-Ben and Steve
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