🔒 Membership Positions - March 28, 2021

Hey Everyone!

We ended the week with some green in all the major indices. The S&P500 and DOW30 climbed back up to their all-time-highs, while tech stocks were still in consolidation.

Here's a snapshot of how the overall markets did this week:

Trade of the Week:

If you've been trading the Wheel Strategy, you most likely got assigned your 100 shares from your CSP or your covered calls expired worthless.

Just like last week, here are two options you can consider taking:

Option 1: To restart your Wheels again on Monday, you can consider selling around 4-6 weeks out at the same strike price that you sold last month. For example, if you had a Wheel for PINS and sold a covered call at the $76 strike, you can resell your next call at the $76 strike again. This way, you will still be collecting premium and lowering your cost basis as you patiently wait for your shares to retrace back up.

Option 2: Because you initially sold covered calls against your shares to lower your cost basis, you can also consider selling 1-2 strikes below your initial sold strike price. For example, if you purchased 100 shares of PINS for $76 and sold a call for $400, your new cost basis is $76 - $4.00 = $72.00. Instead of selling at the $76 strike, you can consider selling at the $75 or $74 strike. You will be obligated to sell your shares for a lower price than you initially purchased them for and higher than your new cost basis. However, you will be able to collect more premium since you are selling a little closer to the ATM strike.

Pay attention to the delta: You can always look at the delta of the call you are selling since the delta roughly approximates the probability of the price of the stock reaching the strike by expiration. If you see that the delta is 0.10, you know that there is roughly a 10% chance that the price of the stock will reach that strike price by expiration. Likewise, if you see that the delta is 0.20, you know that there is roughly a 20% chance that the price of the stock will reach that strike price by expiration.

If you're a beginner, we recommend you starting off with selling cash-secured puts around 1-3 strikes OTM. This is typically a conservative starting point when starting the Wheel Strategy. However, if you're more bullish about the markets, we recommend starting your new Wheel by selling a covered call around 1-3 strikes OTM to not only receive the premium, but also make capital gains if you are called away at expiration.

Here are some trade recommendations and see what fits your personal risk-tolerance:

MSFT:

Monday Open:$230.27

Friday Close:$236.48

Change: 2.7%

Starting a New Wheel: Selling a Cash-Secured Put on MSFT

- MSFT's Current Price: $232.34

- Capital needed: $23,000.00

- Sell at the Expiration Date: 2021-04-23

- Select the Strike: $230.00

- Premium you'll receive: $355.00

- Cost basis: $230.00 - $3.55 = $226.45

Starting a New Wheel: Selling a Covered Call on MSFT

- MSFT's Current Price: $232.34

- Capital needed: $23,234.00

- Sell at the Expiration Date: 2021-04-23

- Select the Strike: $232.50

- Premium you'll receive: $837.50

- Cost basis: $232.34 - $8.38 = $223.97

AMD:

Monday Open:$79.99

Friday Close:$77.41

Change: -3.23%

Starting a New Wheel: Selling a Cash-Secured Put on AMD

- AMD's Current Price: $76.22

- Capital needed: $7,600.00

- Sell at the Expiration Date: 2021-04-23

- Select the Strike: $76.00

- Premium you'll receive: $251.50

- Cost basis: $76.00 - $2.52 = $73.48

Starting a New Wheel: Selling a Covered Call on AMD

- AMD's Current Price: $76.22

- Capital needed: $7,622.00

- Sell at the Expiration Date: 2021-04-23

- Select the Strike: $76.50

- Premium you'll receive: $365.00

- Cost basis: $76.22 - $3.65 = $72.57

AAPL:

Monday Open:$120.33

Friday Close:$121.21

Change: 0.73%

Starting a New Wheel: Selling a Cash-Secured Put on AAPL

- AAPL's Current Price: $120.59

- Capital needed: $12,000.00

- Sell at the Expiration Date: 2021-04-23

- Select the Strike: $120.00

- Premium you'll receive: $242.50

- Cost basis: $120.00 - $2.42 = $117.58

Starting a New Wheel: Selling a Covered Call on AAPL

- AAPL's Current Price: $120.59

- Capital needed: $12,059.00

- Sell at the Expiration Date: 2021-04-23

- Select the Strike: $121.00

- Premium you'll receive: $352.50

- Cost basis: $120.59 - $3.52 = $117.06

NKE:

Monday Open:$137.63

Friday Close:$132.99

Change: -3.37%

Starting a New Wheel: Selling a Cash-Secured Put on NKE

- NKE's Current Price: $128.64

- Capital needed: $12,800.00

- Sell at the Expiration Date: 2021-04-23

- Select the Strike: $128.00

- Premium you'll receive: $207.00

- Cost basis: $128.00 - $2.07 = $125.93

Starting a New Wheel: Selling a Covered Call on NKE

- NKE's Current Price: $128.64

- Capital needed: $12,864.00

- Sell at the Expiration Date: 2021-04-23

- Select the Strike: $129.00

- Premium you'll receive: $627.50

- Cost basis: $128.64 - $6.28 = $122.36

PINS:

Monday Open:$71.80

Friday Close:$69.07

Change: -3.8%

Starting a New Wheel: Selling a Cash-Secured Put on PINS

- PINS's Current Price: $68.21

- Capital needed: $6,800.00

- Sell at the Expiration Date: 2021-04-23

- Select the Strike: $68.00

- Premium you'll receive: $395.00

- Cost basis: $68.00 - $3.95 = $64.05

Starting a New Wheel: Selling a Covered Call on PINS

- PINS's Current Price: $68.21

- Capital needed: $6,821.00

- Sell at the Expiration Date: 2021-04-23

- Select the Strike: $68.50

- Premium you'll receive: $450.00

- Cost basis: $68.21 - $4.50 = $63.71

Earnings

Be mindful of upcoming earnings. With some of the stocks that are "on sale" right now, they may rally up into earnings as many investors with have more enthusiasm in purchasing more shares. Also be mindful of the higher IV during the week of earnings. You'll notice that premiums will be higher than usual. Remember that higher premiums often associate to higher risk since price fluctuations after an earnings report typically are very volatile.

Staying On Track With Your Investing Plan

We want to give you a little nudge this week to see if you're on track with your investing plan. Are you still depositing money into your brokerage each month? Are you utilizing your Wheel premiums to buy more shares? Are you staying focused and not getting side tracked by news articles, social media, or even some guy on CNBC yelling at the camera and pushing random soundbites?

Stick to the plan and keep investing in companies that are fundamentally sound and growing consistent top-line revenue. This is the way to consistently grow your wealth over time and let your money work for you.

Here are some stocks that we've been investing in over the past several years:

NKE:

WM:

MA:

MSFT:

DIS:

AMD:

AAPL:

S&P500:

Isn't interesting to see that with every market pullback, correction, and crash, we were always able to retrace back up and beyond? 👍

Level 3 Launch 🎉

It's happening! Our Level 3 video series is coming out this weekend and we're so excited to share it with you! This is where you're able to learn how to profit during neutral to bear markets, very similar to what we are experiencing right now with many of our favorite tech stocks.

If you're already a Premium Member, you'll have access to all of this content on top of the Level 2 video series and Premium Membership Positions. If you want to upgrade your plan, feel free to contact us at info@calltoleap.com and my team will help you with it.

Discord Launched! 💬

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.

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.

Level 1 FAQ 🙋‍♂️🙋‍♀️

Have questions? Before asking me and my team, feel free to check out our Level 1 FAQ. This FAQ is located on the Level 1 page. You might find what you're looking for. 😊

If you do have questions, make sure to ask them in our Level 1 or Level 2 page, rather than asking us via email.

Keep patient and disciplined, and stay amazing, everyone! 😀

-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.