by Ben Weiss, for the Call to Leap Team
Congrats—we made it through (most of) earnings season, everyone! With a cautiously bullish outlook, Steve and I took to trading some new positions this week. Let's take a look...
Ben’s trades this week
Well that escalated quickly... Steve and I both had open CSP positions in AMZN, including puts at the $175 and $177.50 strikes for various May expirations. Amazon had solid earnings results and investors responded by pushing the stock higher after their announcement. Combining AMZN's price bump and the drop in implied volatility that typically follows earnings announcements (also known as "IV crush"), Steve and I were able to close out our AMZN puts a few weeks early for 50-60% profits. With the recent market choppiness, I'm comfortable lowering my profit threshold a little and take profits sooner. I often like to reach 80% profit if the trade is trending well, but the recent market conditions have me trading a bit more conservatively. Remember: any money is good money! I'll look to re-enter into a new AMZN bullish position next week potentially.
Trade 1: PYPL cash-secured put (CTL Level 1)
Expiration Date: July 19, 2024 (a "monthly" expiration)
Step 1: Have $6,000 cash as collateral
Step 2: Sell 1 $60 strike put option (delta 0.22) for $1.20/share
Credit/premium received: $120/contract (minus fees and commissions)
Thoughts: I'm liking PYPL's strong response following earnings, with it notching new higher highs and higher lows. I considered selling at the June 21 monthly expiration though decided to go out further in time to give me more time to be right given how choppy the market has been. Likewise, I considered the more-aggressive $62.50 strike for more premium, but the lower $60 strike offers more protection from price fluctuation between now and July. As always, I'll look to close out this position earlier than July if possible to improve my annualize return on investment (AROI).
Trade 2: VZ cash-secured put (CTL Level 1)
Expiration Date: July 19, 2024 (a "monthly" expiration)
Step 1: Have $3,600 cash as collateral
Step 2: Sell 1 $36 strike put option (delta 0.19) for $0.40/share
Credit/premium received: $40/contract (minus fees and commissions)
Thoughts: VZ is typically a less volatile, more "boring" stock that doesn't pay as juicy of premiums as megacap tech companies, but I think the company still strong, fairly or even undervalued, and pays an attractive dividend. With a lower notional value for selling options (the $36 strike requires a relatively low $3,600 in cash), I may scale into this position with additional contracts in the coming week.
In it for the long-haul...Even though I didn't open a new options positions this week, as always, I held true to the dollar-cost average (DCA) method and bought a few shares 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, especially with so much perceived uncertainty right now. Who knows if the market will go up, down, or sideways? All I know is I'll continue to be disciplined about saving and investing no matter what.
Steve's trades this week
Trade 1: AMZN cash-secured put (CTL Level 1)
Expiration Date: June 7, 2024 (a "weekly" expiration)
Step 1: Have $18,000 cash as collateral
Step 2: Sell 1 $180 strike put option (delta 0.29) for $2.36/share
Credit/premium received: $236/contract (minus fees and commissions)
Thoughts: AMZN had a very good earnings announcement and I remain bullish on the stock. The stock is trading near its all-time high so I'm keeping a close eye on if the stock will continue its movement upwards or move back down towards the middle of the green upward channel.
Go long!...I continued adding shares to my long-term positions this week, including some of my favorite ETFs like SPY and SCHD and one of my favorite stocks WM.
As always, tweak these positions to whatever you feel comfortable with and fits your risk tolerance and investing goals.
You got this, everyone! Stay disciplined, pay yourself first, and always invest in your greatest asset—yourself. 🙌🏻
- Ben and Steve
Friendly reminders from Steve and Ben:
Check out Steve's favorite checking and savings accounts
Click here and here to see different accounts that could fit your banking needs. Offers including great sign-up bonuses and higher interest rates to let your money work harder for you.
💪💰 Do you have the power?...Based off the great recommendation from Steve and lots of folks in the CTL community, Ben recently signed up for budgeting app Empower to get a better dashboard picture of all his various accounts and has been really been enjoying how easy it is to use. If you'd like to give Empower a try, click here to check it out!
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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