by Ben Weiss, for the Call to Leap Team
Hi everyone, I'm writing to you all this week with a full heart. While we still have a few more 2023 trading days left in the short week ahead, I'm taking a moment today to look back on the year. For me, 2023 has been a year of brave learning and deep relationship building, and I'm so grateful to have met and grown with Steve and so many folks in our community here. Whatever the holidays may or may not look like for you and your clan, I want to wish everyone calm, reflective, restorative, and loving holidays, on behalf of Steve and the CTL Team. Thank you to all! In this week's edition of Trading Spaces, Steve and I are sharing our weekly trades and outlook ahead. Let’s dive right in…
The market this week
Continuing for the 8th week in a row, the US market had another positive week—the longest weekly winning streak since 2017. It appears the "Santa Claus Rally" is in full effect. By the numbers, the Dow (+0.15%), S&P500 (+0.61%), and Nasdaq (+1.21%) all finished the week in the green, with big tech “megacaps" like GOOGL, AMZN, and MSFT standing out. In the other direction, Nike (NKE) suffered a very rough week—down over -11%—after lowering their sales outlook for next year. The company anticipates lower sales revenue and announced a plan to cut $2 billion in costs over the next three years.
In the news
Following the Federal Reserve's "dovish" news last week (indicating interest rates may start coming down in 2024 and beyond), the US market got another boost this week from encouraging data from the Personal Consumption Expenditures (PCE) price index. The Fed tends to prefer the PCE to track inflation, over the Consumer Price Index (CPI), because the PCE captures what consumers are actually spending versus the costs of goods and services measured by CPI. Including food and energy, the PCE fell -0.1% this month for the first time since April 2020 and after peaking above +7% in 2022. Though broadly positive for the week, we did see a sudden market pullback or "correction" on Wednesday—the largest down day in a few months—followed by a healthy recovery to close out the week. But remember, market corrections (in both directions) are natural and an expected part of a healthy stock market.
All the feels... Emotions can certainly come into play during big market down days—or big up days, too! Remember, we are a community of long-term, disciplined, and committed investors. Dollar-cost averaging investing and solid wealth-minded habits will help together weather shorter-term fluctuations with a level head because we are bullish on the S&P500 and the broader stock market over the long run. I encourage you to feel your feelings—investing money can be a lot to process. We're always here (on Discord) to help answer questions.
SPY
QQQ
Ben’s trades this week
'Cause we're moving on up
Following the lead from Steve and other members in the community, I've decided to transition one of my brokerage accounts over to Fidelity to take advantage of their 5% interest paid on uninvested capital. That means any cash I have in the account—just sitting there or actively being used as collateral for cash-secured puts (CSP)—will earn extra income which can really add up over time. While I'm excited to make this move finally, it means my positions will be frozen for a few days while they are in flight. But before I get locked out from trading...
See ya next year
I looked to close out more of my cash-secured puts (CSP) on AAPL, AMZN, and GOOGL that had lost the major of their option value, in an otherwise relatively quiet trading week. Remember: as an options seller, losing value is good because I can buy back that option to close at a lower price and lock in my profits well ahead of the expiration date).
On the other side of my AMZN wheel, I had a covered call expiring next Friday that had gone fairly deep in-the-money (the price of AMZN is now well above my call's strike price). As I remain bullish on AMZN through the start of the new year, I decided to roll my AMZN covered call "out and up" for a nice credit—rolled out from Dec 29 to Jan 19 and up from $147 to $147.5 This move gives me more time (and profit) to ride my 100 shares of AMZN through the holiday season without facing likely option assignment next week.
Note: if I were opening a new call or put on AMZN, I would select a strike price closer to at-the-money (ATM) as I am still bullish on AMZN. I chose the new strike of $147.5—well below the current share price of ~$153—in order to realize at least a small credit when rolling up in price. Any higher of a strike price and I would've had to pay a debit to roll the option, which I'm typically not a fan of doing.
Investing
This week, I took a cue from Steve and added a share to my COST position since the stock appears to be continuing its bullish trend. I also held true to the dollar-cost average (DCA) method and bought a share each of SPY/VOO and QQQ. The DCA method allows me to check my uncertainty at the door about whether now is a good time buy or not. I like to stick to my schedule and buy a small number of shares regardless of the markets movement that week to keep me on track long term.
In general, I buy SPY in my taxable brokerage account because my goal one day is to sell covered calls against my shares of SPY once I've collected 100 shares. In my Roth IRA, I like to buy shares of VOO since it has a lower expense ratio (0.03%!!!) for super-long-term holding.
Regardless, I love to buy high-quality broad-based ETFs. For me, time is money—I can always make more money but I can never make more time. I gladly enjoy paying smart finance professionals a small cut to decide which stocks to buy and sell, saving me from hours of research.
Steve's trades this week
Steve also took the opportunity to lock in healthy profits this week by selling-to-close his LEAPS calls in AMZN and AAPL. He also closed all of his CSPs that had decayed 50%+ in option value.
As always, tweak these positions to whatever you feel comfortable with and fits your risk tolerance.
Friendly reminders from Steve:
Let your money work harder for you
I'm also getting a 5% APY by having my cash sit in my Fidelity account as I sell my cash-secured puts. Here's the link if you're interested in getting started!
Manage Your Cash Against Rising Costs | Compare Our Rate | Fidelity
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Remember that we are a community of wealth builders at all different levels, so be positive, kind, and helpful to others, so we can help each other get to financial freedom much faster.
⚠️Also, please make sure to never give your personal information to people on Discord, especially people who may seem to look like Steve. There are many impersonators on Discord who will ask you to give them money to invest, which I will never do. Always check to see if the people you talk to have the "Moderator" tag in their profile. Stay safe everyone!
High-Yield Savings Account
If you don't have a high-yield savings account, feel free to open one up with SoFi with my affiliate link here. You can get up to a $250 sign up bonus and this link helps supports our entire team with a small commission. Woohoo!
You got this, everyone! Stay disciplined, pay yourself first, and always invest in your greatest asset—yourself. 🙌🏻
-Ben and Steve
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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