by Ben Weiss, for the Call to Leap Team
Closing time...The market had a strong bullish week, and I had good opportunities to close out a number of my bullish cash-secured puts, including GOOGL $145 put, CVS $72.50 put, and CMCSA $40 put. Each of these had declined 75% or more in value and had at least 2 weeks left until expiration, so it was worth it to me to pay a small amount of premium back to remove all the risk from the table.
Steve and I also closed our GOOGL LEAPS this week. Opened back in early February, these long-dated calls took a while to turn profitable as GOOGL dropped in price soon after buying to open the LEAPS. However, patience paid off. Because we buy LEAPS calls that have well over a year to become profitable, I wasn't too worried. The call had declined over -30% in value at one point but bounced back to near-breakeven gradually and then turned profitable quickly on Monday during GOOGL's big volatile up day. I sold at a 12% gain, nicely over my typical profit target of +10% for LEAPS, but I was prepared to hold the option longer if needed.
Did you do your homework?...Check out my chart below on CMCSA from last week, which includes another technical analysis indicator I'd like to introduce you too: MACD, or Moving Average Convergence/Divergence. Stay tuned for a deeper dive on what this indicator means and how to use it in your technical analysis. In the meantime, your homework is to read this great introduction from Investopedia (one of my favorite sources for learning). Who said homework can't be fun? 🤓
Ben’s trades this week
Trade 1: CMCSA cash-secured put (CTL Level 1)
Expiration Date: April 19, 2024 (a "monthly" expiration)
Step 1: Have $4,250 cash as collateral
Step 2: Sell 1 $42.50 strike put option (delta 0.47) for $0.97/share
Credit/premium received: $97/contract (minus fees and commissions)
Thoughts: I had closed the $40 April 19 put earlier in the week to lock in about 75% profit. Since then, CMCSA slid back down slightly so I took the opportunity to re-open the put option position at a higher strike price but with the same expiration date to squeeze a bit more juice out of this monthly option cycle. Looking at the CMCSA chart, I'm seeing good uptrending plus the stock price is currently sitting near the bottom of its trading channel. If CMCSA bounces off the bottom channel line and keeps climbing, I'll look to close out this put early.
Trade 2: PLTR cash-secured put (CTL Level 1)
Expiration Date: April 19, 2024 (a "monthly" expiration)
Step 1: Have $2,400 cash as collateral
Step 2: Sell 1 $24 strike put option (delta 0.44) for $1.05/share
Credit/premium received: $105/contract (minus fees and commissions)
Thoughts: Thanks to the suggestion from Discord members, I decided to start a new wheel in PLTR. I like that the stock price is trending in a good direction, but please note this stock does not pay a dividend and is not (yet) part of the S&P 500 so this trade might not be for everyone. With a very small share price of $24 (compared to AAPL, GOOGL, AMZN, etc. at $150+ per share), I may scale into more contracts of PLTR over time.
Trade 3: HPQ cash-secured put (CTL Level 1)
Expiration Date: May 17, 2024 (a "monthly" expiration)
Step 1: Have $2,900 cash as collateral
Step 2: Sell 1 $29 strike put option (delta 0.30) for $0.51/share
Credit/premium received: $51/contract (minus fees and commissions)
Thoughts: I also started a new wheel in HPQ, which like CMCSA is a bit more of a "boring" stock with lower volatility and premiums, but does pay a healthy dividend and is listed on the S&P 500. I see the stock is pretty well beaten down and I wouldn't mind owning the shares at this discount price if they were assigned to me. Also, I chose a further-out expiration in May to collect a bit more extrinsic time value.
Investing like clockwork...As always, I held true to the dollar-cost average (DCA) method and bought a share each of SPY, QQQ, SCHD. 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 every week regardless of the market's movement to keep me on track long term.
💪💰 Do you have the power?...Based off the great recommendation from Steve and lots of folks in the CTL community, I recently signed up for budgeting app Empower to get a better dashboard picture of all my various accounts and I've really been enjoying it so far. While I won't be using the app to invest or trade stocks and options directly, the insights I gain into how I'm spending and earning will certainly pay dividends 😉 So far the interface on desktop and mobile is very intuitive and user friendly. If you'd like to give Empower a try, click here to check it out!
Steve's trades this week
Patience pays off...Like Ben, I closed out my GOOGL LEAPS calls this week. If needed, I was prepared to hold these long-term calls until Google's next earnings announcement or further into a future quarter, but fortunately GOOGL surged this week and I was able to sell to close for my target 10% profit. This riskier LEAPS trade took a bit longer than I was originally hoping for, but it turned out well nonetheless. Any money is good money, even if it takes a little bit longer to arrive. Woohoo!
Trade 1: AMZN LEAPS call (CTL Level 2)
Expiration Date: January 16, 2026
Step 1: Buy 1 $150 strike call option (delta 0.80) for $54.50/share
Debit/premium paid: $5,450/contract (plus fees and commissions)
Thoughts: I plan to sell this call a couple of days before the next earnings announcement, if not sooner.
Go long!...Adding to my long-term holds, I also bought more shares of my favorite ETFs including SPY and QQQ as well as some of my favorite dividend-paying stocks including WMT, ORCL, LOW, and META.
As always, tweak these positions to whatever you feel comfortable with and fits your risk tolerance.
You got this, everyone! Stay disciplined, pay yourself first, and always invest in your greatest asset—yourself. 🙌🏻
- Ben and Steve
Friendly reminders from Steve:
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Let your money work harder for you...
I'm also getting nearly 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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