by Ben Weiss, for the Call to Leap Team
Ben’s trades this week
Goin' up?...AAPL appears to be in a bit of a holding pattern this week so I took the opportunity to roll my covered call "out and up". It was expiring next week, and since I'm still bullish on AAPL over the next month or more, I added more extrinsic value into the option by rolling the call out to March 15 and allowed for the stock to run up further by rolling the call up from $190 to $195. Even though the stock has declined a little following earnings last week, I am bullish on the stock and want to allow more room for the stock to grow before my shares are potentially called away.
Trade 1: AAPL cash-secured put (CTL Level 1)
Expiration Date: March 15, 2024 (a "monthly" expiration)
Step 1: Have $19,000 cash as collateral
Step 2: Sell 1 $190 strike put option (delta 0.51) for $4.25/share
Credit/premium received: $425/contract (minus fees and commissions)
Thoughts: I opened my first contract in this option last week before earnings. With AAPL bouncing back after a post-earnings drop, I decided to open a second contract to fill out my full position size (2 contracts total). By selling one put before earnings and one after, I attempted to "dollar-cost average" straddling across the major event.
Trade 2: TQQQ cash-secured put (CTL Level 1)
Expiration Date: March 1, 2024 (a "weekly" expiration)
Step 1: Have $5,600 cash as collateral
Step 2: Sell 1 $56 strike put option (delta 0.24) for $0.98/share
Credit/premium received: $98/contract (minus fees and commissions)
Thoughts: As the Nasdaq (and therefore TQQQ) continue to show bullish movement and a potential breakout into a new trading channel, I wanted to add to my existing TQQQ exposure. With a more-bullish trend, I chose a shorter expiration date—only 20 days. I was torn between choosing the $55 and $56 strike prices, but went with the slightly more aggressive $56 to earn more premium. As always, tweak these positions to whatever you feel comfortable with and fits your risk tolerance.
🚨Caution: If you're not familiar with TQQQ, it's an ETF that follows the movement of the Nasdaq index fund QQQ. However, because it's 3x leveraged, it will increase or decrease 3 times the movement of QQQ. By nature, trading in leveraged ETFs can be highly volatile and isn't for everyone! I like trading TQQQ because of its much lower share price compared to QQQ, making it a more accessible way to trade in the broader Nasdaq index. Please reach out with any questions!🚨
Trade 3: TSLA covered call (CTL Level 1)
Expiration Date: March 15, 2024 (a "monthly" expiration)
Step 1: Have 100 shares of TSLA as collateral
Step 2: Sell 1 $235 strike call option (delta 0.10) for $1.22/share
Credit/premium received: $122/contract (minus fees and commissions)
Thoughts: While this isn't a "new" position for me, I already hold 100 shares of TSLA from a stock purchase a while back so I sell covered calls every month against these shares. However, I don't really want my shares called away as I'd like to hold onto them for the long term. While losing my shares to assignment is always a possibility, I greatly reduce those changes by selling a far out-of-the-money (OTM) call with a delta typically between 0.05 and 0.15. From the chart, I see TSLA has a good chance of rebounding upwardly from recent major losses, at least in the short term.
Trade 4: GOOGL LEAPS call (CTL Level 2)
Expiration Date: December 19, 2025
Step 1: Buy 1 $120 strike call option (delta 0.81) for $48.35/share
Debit/premium paid: $4,835/contract (plus fees and commissions)
Thoughts: Steve and I both bought GOOGL LEAPS this week as we saw the stock moving up to fill the downward gap it experienced last week following earnings. As we typically do with LEAPS, I'll look to close this position quickly at around 10% gains if possible.
Investing like clockwork...As always, I 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.
Steve's trades this week
In addition to the GOOGL LEAPS call purchase I shared with Ben, I also added to my holdings of V and WM by adding a few shares of each. I have my eye on AAPL for a potential LEAPS opportunity next week if it's able to break above the $196 level.
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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