🔒Membership Positions - August 28, 2022
- Call to Leap
- Aug 26, 2022
- 5 min read
Hey Wealth Builders!
This week, the stock market had a nice drop after Federal Reserve Chair Jerome Powell said that the central bank won’t back off in its fight against rapid inflation. This may imply that more rates are coming, which as we all know, the stock markets hates.
What 's Steve Investing? 📈
SPY
This week, I paused on adding anymore long-term holds to my portfolio. Notice that we couldn't break above the yellow resistance line and even broke through the $415 horizontal support with a long red candle stick. If we continue to sell-off even more as we enter September and October, we may retest the horizontal $390 support level.
For now, I'm going to stay patient to see how markets digest the news in the next couple of days.
AAPL
We see the same pattern with many stocks in the index, like AAPL. We may drift down to the $151 horizonal support line.
MSFT
MSFT also had a hard fall and dipped back down into its channel.
AMZN
Looking at AMZN, there seems to be a strong resistance line at the $144 level, which is where the stock was rejected. This $144 resistance line served as a support line back in 2020 and early 2021.
Zooming in, AMZN also filled in the $130-135 gap.
AMD
AMD had a hard time breaking and staying above the $100 line. We may drift back down to the $90 support line.
Trade Of The Week:
I'm not starting any new wheel trades for now and observing where the markets go.
However, I'm planning on starting new bear call spreads. More on this in the Premium Membership Post.
Ask Steve 💭
Let's see what some of our members asked this week. Here are the top questions we received:
Q1: Hello, I am new and still digging into the website and trying to discover everything. One thing I want to start messing with a little is the stock market simulator bonus offered in the latest deal. Maybe it is in an obvious location and I am just overlooking it, but could you point me in that direction?
A1: You can check out the simulator here: https://www.calltoleap.com/training
If you have a brokerage, like TD Ameritrade, you can also look into using their Think or Swim Paper Trading. It's a wonderful tool that uses real data to help you trade.
Q2: I just recently joined your premium membership and I am super excited to begin my journey to financial freedom! I currently have a relatively small portfolio of about $14000. I have a few small holdings in companies that do not fit your stock criteria. Should I sell these off before I get started even if it’s at a loss?
A2: This totally depends on you and if you believe in the companies you are holding. For me, I like to stick to companies that are part of the S&P500 since the majority of Wall Street money go into these stocks and they are not easily sold off during times of uncertainty. If you see that some of the companies you hold are not part of the S&P500 index and you wish to sell them, you can consider selling them in blocks. For example, you can consider selling 20%-30% of your holdings this week, another 20-20% of your holding next week, and so on. If you sell your shares for a loss, you can use the loss to offset your capital gains tax for 2022.
Once you have free capital, you can consider buying S&P500 ETFs, such as VOO and SPY. Or, if you feel more comfortable, you can buy individual stocks, like AAPL, which is also part of the DOW30 and pays a dividend.
Q3: Hi, with a capital more than 50000, could you give an example on how to stagger your options, covered calls or csps?
If your target is a passive income of 6000 per months, what would be a good way to do it and how much capital would i need? Can you give an example on how you would do it? No financial advice, I know. Just how you or Steve would do it. Thanks
A3: Generating $6,000 from $50,000 of trading capital is a 12% monthly return, or a 144% annual return. This means the portfolio would more than double each year, which is unlikely, especially during these market conditions.
To be more on the conservative side, you may need between $120,000-$300,000 to generate a 2-5% return of $6,000 per month. Keep in mind that these are the goals we set when we have a neutral to bullish market and we realize gains from premiums, dividends, and capital gains (from having our shares being called away).
If you have $300,000 to sell covered calls, you can conservatively split out your covered calls underlyings to 3-6 stocks. For example:
$100K for AAPL
$100K for HD
$100K for AMZN
When you sell your covered calls, you can sell 2-3 contracts each week, wait another 1-2 weeks to sell 2-3 contracts, and so on. By doing this, you would essentially be selling covered calls on the average movement of the underlying stocks and slowly scaling your covered call positions. You would also have contracts expiring almost every week to then resell contracts for the next month.
If you wish to utilize margin or have more free capital, you can also set up bear call spreads to pair with your covered calls. You can set up a 1:1 or 1:2 bear call spread to covered call ratio.
In the end, see what fits your risk tolerance and what you are most comfortable with.
📌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. 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.
Hang in there, everyone! September and October are usually a bit choppy in the markets. Continue to contribute capital into your accounts and stay patient. As I've said many times before, it's important to always have cash on the side as a position. I'm hoping we have a nice bull run as we enter the holiday season.
-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.
