Hey Investors and Traders!
Meh, looks like another neutral week for us, but it does look like we are slowly climbing out of our correction hole.
Here are some notable price movements in the stocks we're trading:
Advanced Micro Devices AMD
Monday Open: $83.65
Friday Close: $83.17
Microsoft MSFT
Monday Open: $218.79
Friday Close: $219.66
Apple AAPL
Monday Open: $120.06
Friday Close: $119.02
Trade of the Week:
Expiring Options
Many of you sold cash-secured puts on AMD around the $72.50 strike, MSFT at the $202.50 strike, and AAPL at the $106.25 strike, around a month ago, and your puts expired worthless this past Friday. You should have received between $330-735 of premium per contract! You can check out this trade from our September 20, Membership Positions here. If this happened, you can restart your Wheel again by entering with another cash-secured put. Yay!
Again, keep in mind of earnings in October. MSFT has earnings next week on October 27, AMD has earnings on October 27, and AAPL has earnings on October 28. If you select an expiration on or after the week of earnings, the premiums will be larger due to higher implied volatility. Again, we don't recommend selling 1-2 weeks calls because of the current volatility and uncertainty in the political atmosphere.
Starting a New Wheel: Selling a Cash-Secured Put on AMD
AMD's Current Price: $83.17
Capital needed: $8,300
Sell at the Expiration Date: November 13, 2020
Select the Strike: $83.00 (Willing to buy the 100 shares at this price)
Premium you'll receive: $560
Cost Basis: $83.00 - $5.60 = $77.40
Note: If you want to be more conservative, you can select a strike lower than the current price. You can consider choosing the $82, $81, or $80 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.
Starting a New Wheel: Selling a Cash-Secured Put on MSFT
MSFT's Current Price: $219.66
Capital needed: $21,750
Sell at the Expiration Date: November 13, 2020
Select the Strike: $217.50 (Willing to buy the 100 shares at this price)
Premium you'll receive: $793
Cost Basis: $217.50 - $7.93 = $209.57
Note: If you want to be more conservative, you can select a strike lower than the current price. You can consider choosing the $215 or $212.50 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.
Starting a New Wheel: Selling a Cash-Secured Put on AAPL
AAPL's Current Price: $119.02
Capital needed: $11,900
Expiration Date: November 13, 2020
Strike: $119.00 (Willing to buy the 100 shares at this price)
Premium: $590
Cost Basis: $119 - $5.90 = $113.10
Note: If you want to be more conservative, you can select a strike lower than the current price. You can consider choosing the $118 or $117 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.
Updated Earnings:
Again, earnings are coming out, which means that there is more implied volatility! Make sure to keep an eye out on these companies to see if they have good report cards. Also, we updated some of the earnings dates:
Microsoft MSFT | October 27
Advanced Micro Devices AMD | October 27
MasterCard MA | October 28
Visa V | October 28
Amazon AMZN | October 29
Facebook FB | October 29
Apple AAPL | October 29
PayPal PYPL | November 2
Waste Management WM | November 2
Square SQ | November 5
Final Thoughts:
Remember to stay conservative the next couple of weeks until election. This is not the best time to go "all in" on stocks. You may want to consider just raising cash from your Wheel premiums and letting most of it sit in your account until there is more confidence in the stock market.
Oh and by the way, have you voted yet? No matter who you're voting for, go out and vote to make your voice heard! This election is definitely going to be a historical one.
Stay disciplined and positive! 😎
- 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.