Membership Positions - November 15, 2020

Hey Investors and Traders!

Whoa! Did you see the markets this week? It looks like the S&P500 and DOW30 hit an all-time weekly high! Woohoo! 🙌

Some of the stocks we're trading (MSFT, AMD, and AAPL) are still rangebound, meaning that Smart Money is still taking a break from putting more money into these companies due to their extraordinary run up from the past couple of months. Instead, the large institutions have been rotating and rebalancing their portfolios with more industrials, healthcare, and financial stocks.

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

Advanced Micro Devices AMD

Monday Open: $84.24
Friday Close: $81.43

Microsoft MSFT

Monday Open: $224.44
Friday Close: $216.51

Apple AAPL

Monday Open: $120.50
Friday Close: $119.26

Trade of the Week:

Many of you sold cash-secured puts on AMD around the $83.00 strike, MSFT at the $217.50 strike, and AAPL at the $119 strike, around a month ago. You should have been assigned your 100 shares of AMD and MSFT, and your AAPL contract should have expired worthless, meaning that you got to keep all of the premium without actually owning the shares! With these trades, you should have received between $560-793 of premium per contract! You can check out this trade from our September 20, Membership Positions here. Isn't it a nice feeling to have the strike price land near your Friday's expiration date? 😉

If you were assigned your AMD and MSFT shares, you can now convert your trade into a covered call and sell at around the same strike that you sold before for your cash-secured put. This means that if you followed our trade, you would sell a covered call for AMD at around the $83.00 strike and MSFT at around the $217.50 strike. You can also sell another one-month out (2020-12-11) for your expiration to ride through the volatility. If you are more bullish, you can consider selling 1 strike higher than your previous strike, so you can make some capital gains if your shares are called away next month. 💰

If your AAPL contract expired worthless, you can now restart your Wheel and sell another cash-secured put to bring in more income.

Below are some Wheel Strategy recommendations. Feel free to choose how you want to enter your Wheel:

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

- MSFT's Current Price: $216.51

- Capital needed: $21,500.00

- Sell at the Expiration Date: 2020-12-11

- Select the Strike: $215.00

- Premium you'll receive: $590.00

- Cost basis: $215.00 - $5.90 = $209.10

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

- AAPL's Current Price: $119.26

- Capital needed: $11,900.00

- Sell at the Expiration Date: 2020-12-11

- Select the Strike: $119.00

- Premium you'll receive: $385.00

- Cost basis: $119.00 - $3.85 = $115.15

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

- AMD's Current Price: $81.43

- Capital needed: $8,100.00

- Sell at the Expiration Date: 2020-12-11

- Select the Strike: $81.00

- Premium you'll receive: $370.00

- Cost basis: $81.00 - $3.70 = $77.30

Again, if you want to be more conservative with selling your cash-secured put, you can select a strike lower than the current price. 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.

Choose Your Investments Wisely!

We know there are a lot of stocks out there like NIO, SNOW, UBER, LYFT, and RKT that look tempting to invest in since everyone's talking about them on the media. We encourage you to always take a step back and ask yourself these questions:

Is the company part of the S&P500 and DOW30? You want to make sure that the companies you choose made "honor roll" and were specifically chosen to be on the list of the top 500 and 30 companies in the United States.
Is the company doing well fundamentally by making consistent top-line revenue over the past 3-5 years? Do you truly understand how the business makes their money and do you have faith that they can not only survive but thrive in the future? Or is the company just a cool, new kid on the block that everyone wants to be friends with, but no one knows his unknown past?
Is the company doing well on a technical perspective where Smart Money is investing in them and pushing the stock price higher? Don't just invest in a stock just because it's cheap. Cheap stocks are cheap for a reason. Why? It's because the Smart Money don't want to go anywhere near them!

Final Thoughts:

So it looks like the markets overall are trending higher and making new all-time highs! But again, remember to play it safe. There's still a little drama in the White House with President Trump and Joe Biden. We still need to tread carefully for the next two months in case any funky news come out that may rattle the markets.

Stay optimistic because we are still pretty bullish for the upcoming 6 months! ☝

- 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.