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Hi Wealth Builders! 👋

The markets did not have a good week with the Dow, S&P500, and Nasdaq advancing -1.7%, -1.4%, and -1.4% respectively. This week the Fed has again indicated that there will be more rate hikes ahead but I expect 1-2 more before the Fed hits the pause button again. This is because our labor market numbers show signs of a cooling economy (and along with it, signs of a cooldown in inflation).

Steve's Trades

AMZN LEAPS

This week I like LEAPS options for AMZN that are >365 days out with around a delta ~0.70 for moderate risk ~0.80 for lower risk. Keep in mind that AMZN LEAPS are riskier because they don't pay a dividend (i.e., no dividend payout = more risk). As always, the higher delta you choose, the "safer" it is because the option has more intrinsic value that is protected from theta decay. Also, the "safer" play will have a higher premium.

As a reminder, below are our LEAPS guidelines (from the Call to Leap Level 3 training):

Fund your LEAPS using your Wheel premiums
Higher Delta = More Safety (LEAPS have higher intrinsic to extrinsic value ratio)
Position size so you don't exceed 10% of your portfolio in LEAPS options.

Lower risk: Buy 1 January 17, 2025, Delta 0.83, $100 strike LEAPS for $4,460.

Moderate risk: Buy 1 January 17, 2025, Delta 0.68, $125 strike LEAPS for $2,875.

If you buy the LEAPS, then you will have the following choices:

Automatically sell the LEAPS at a $250-300 profit
Sell the LEAPS 1 week before any AMZN earnings releases prior to your LEAPS expiration

*We sell right before earnings because implied volatility is highest, so we sell the contract at a higher price.

AAPL Cash Secured Put

Expiration Date: August 4, 2023

Step 1: Have $18,000 of cash as collateral

Step 2: Sell 1 $180 strike put option (delta -0.29) for $256

Credit/premium received: $256

For those who have entered Bear Call Spreads and your stock has rallied, feel free to sell the first leg of the Bear Call Spread and cover your shares.

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Have a wonderful weekend! 🙂

-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.