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Membership Positions - August 16, 2020

Updated: Jan 16, 2021

Hey Investors and Traders!

It looks like the stock market is in consolidation mode and can't make up it's mind on where to go next.


Here are some notable price movements in the stocks we're trading:

Microsoft MSFT

  • Monday Open: $211.67

  • Friday Close: $208.90

Advanced Micro Devices AMD

  • Monday Open: $85.05

  • Friday Close: $81.30

 

Trade of the Week:

If your AMD shares were called away this past Friday, you can consider re-entering with another cycle(s) by either selling a covered call or a cash-secured put.

Selling a Cash Secured Put on AMD

  • AMD - $81.30

  • Capital needed: $8,100

  • Expiration Date: September 11, 2020

  • Strike: $81 (Willing to buy the 100 shares at this price)

  • Premium: $430

  • Cost Basis: $81 - $4.30 = $76.70

  • Note: If you want to be more conservative, you can select a strike lower than the current price. You can consider choosing the $80, $79, or $78 strike. You won't receive as much premium the further OTM you go. However, if you are assigned the 100 shares, you will be able to purchase the shares at a cheaper price.

Selling a Covered Call on AMD

  • AMD - $81.30

  • Capital needed: $8,130

  • Expiration Date: September 11, 2020

  • Strike: $81 (Willing to sell the 100 shares at this price; This is an ITM call)

  • Premium: $460

  • Cost Basis: $81.30 - $4.60 = $76.70

If you sold a covered call on MSFT last month and your shares did not get called away last Friday, you can sell another covered call around the same strike that you previously sold last month. For example, if you bought 100 shares of MSFT for $210 each and sold at the $210 strike, you can sell at the same strike again one month out.

Reselling a Covered Call on MSFT

  • MSFT- $208.90

  • Requirement: 100 shares of MSFT

  • Expiration Date: September 11, 2020

  • Strike: $210 (Willing to sell the 100 shares at this price)

  • Premium: $225

  • Note: You can calculate your new cost basis by subtracting another $2.25 from your previous cost basis. This means that you got your MSFT shares for an even cheaper price! Woohoo!

 

Earnings:

Keep in mind that Home Depot HD is reporting this Tuesday, August 18. This has been one of the companies we are investing in for the long term. If you are planning on investing in this company, you might want to wait after they show us their report card to see how they did. Let's see if people have been getting into gardening and DIY home stuff during these past couple of months in quarantine.

 

Final Thoughts:

Remember to keep the majority of your portfolio in dividend-paying stocks. You can also consider keeping some of the premiums you are collecting in cash. There might some uncertainty in the near future, perhaps with news on the upcoming election or Tweets coming from the White House. We want to make sure that you don't get surprised by a pullback, especially if you are a beginner stock market investor and trader. Again, pullbacks are normal in the stock market, so there is no need to worry!

Stay safe and healthy!

- 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.

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