🔒 Premium Membership Positions - May 16, 2021
- Call to Leap
- May 15, 2021
- 2 min read
Updated: May 27, 2021
Hey everyone!
Looking at the technical charts, it looks like there are some stocks being favored by Wall Street at the moment. I'm noticing that some stocks are making higher highs and higher lows. I also noticed that many of our favorite stocks hit a low value in their RSI and the bottom of their upward trending support lines.
Here are the stocks that I see that are in favor by large institutions right now:
MSFT
SBUX
AAPL
AAPL is a bit of weird one since it didn't make a higher high back in April. However, I do see that this stock has been making higher lows given that it keeps bouncing off of it's support line.
LEAPS
I believe the previously mentioned stocks are good LEAPS candidates right now. They are more conservative stocks as they are part of both the S&P500 and DOW30, pay a dividend, and have already delivered great earnings.
If you want to purchase a LEAPS option, I would do so conservatively by purchasing between a delta 0.70-0.80 LEAPS option first. Make sure you personally believe in the company and if the stock fits your risk tolerance. Remember that we are still in a market that can be easily spooked by rising interest rates, inflation, and taxes. It is possible that we even break the support line in the short term.
MSFT LEAPS
Expiration Date: June 16, 2023
Delta: 0.75
Strike: $200
Premium: $6600
AAPL LEAPS
Expiration Date: June 16, 2023
Delta: 0.76
Strike: $100
Premium: $3610
SBUX LEAPS
Expiration Date: January 20, 2023
Delta: 0.74
Strike: $90
Premium: $2950
I would recommend selling your options if the underlying stock moves up around $5-10, or when your option value gains around $300-700.
If you want to lower the cost basis of your LEAPS option(s), you can also sell a front month call against your LEAPS to lower your cost basis. This is called a Poor Man's Covered Call, which you can learn how to set up in the Level 3 video series. If you decide to sell front month call, make sure you are willing to cover yourself in case the price of the stock rallies to your leg. If that happens, you can convert your trade into a covered call and sell your LEAPS option for a profit.
Please do not break discipline and buy 20 LEAPS options, or even worse, short-term OTM options. We know some members who did this in the past and their portfolios were crushed. We recommend following the guidelines outlined in our Level 2 video series.
Bear Call Spreads
Yes, you can still set up some bear call spreads. You can consider setting up spreads on AMD and PINS since they seem to be trending neutrally/downward.
AMD:
PINS:
For me, I would wait a couple of days before setting up any spreads. There might be a rally up since these two stocks have been pretty beaten up from the tech sell-off. If AMD rallies up to around $80 and PINS rallies up to around $63, I would be inclined to set up some bear call spreads.
Happy trading and investing! 😎
-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.
