🔒 Premium Membership Positions - May 23, 2021

Hey everyone!

We hope you are all practicing setting up your spreads so you can make some profits on neutral to downward trending stocks.

I personally have a couple hundred shares on AAPL where I bought them for around $132 each and have covered calls sold at the $133 strike. Because I want to give myself a little more premium if AAPL decides to take its time to retrace back up, I'm planning on setting up some bear call spreads.

Here's a snapshot of AAPL for your reference:

AAPL Bear Call Spread

Step 1: Buy one June 25, 2021 call option at the $155 strike for $8 (Delta 0.02)

Step 2: Sell one June 25, 2021 call option at the $135 strike for $75 (Delta 0.16)

Step 3: Set a buy stop order for 100 shares at $134.

Profit: $75 - $8 = $67 per contract

If AAPL stays below $135 on expiration, then both my legs will expire and I get to keep all the premium. If AAPL rallies above $135 on expiration, then I would be able to sell my initial shares that I purchased for $132 for $133 and cycle into a new round of 100 shares at $134 from my buy stop order. (I know, that was a vomit of numbers. You may need to read that again).

Remember that when you set up your bear call spreads, you don't have to wait until expiration to close you position. You can technically close your position within a week or two, or even when you make a profit from the theta decay. Once you close your positions, you can then restart your bear call spreads again. Wash, rinse, and repeat.

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.

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