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🔒Trading Spaces: Steve and Ben's Positions - November 10, 2023

by Ben Weiss, for the Call to Leap Team



Well hello, everyone! My name is Ben W. You might recognize me as one of your moderators on Discord. This week, Steve decided to trade spaces and graciously invited me to share my weekly trades and outlook ahead. I couldn’t be more excited and honored to be here with you all in the Call to LEAP community! Let’s dive right in…

 

The market last week

The market had another strong week, building on last week’s gains and finishing very strong today heading into the weekend. The Dow (+0.56%), S&P500 (1.17%), and Nasdaq (+3.58%) all closed in the green, with many of the big tech players (what we like to call “megacaps”) like MSFT, AAPL, NVDA, GOOGL, and AMZN doing much of the heavy lifting. Notably, TSLA—known to be highly volatile—finished lower again this week, continuing its slide since reporting Q3 earnings in October.


In the news


Interest rates continue to be a focus of many retail and institutional investors. In last week’s Federal Reserve meeting, the FOMC (Federal Open Market Committee) left interest rates unchanged. However, this week Fed Chair Jerome Powell said the Fed is "not confident" it has acted enough to lower inflation, leading to concerns the Fed may further raise rates in 2024. In other news, the US Federal Government is once again facing a looming potential shutdown. Congressional measures passed in October funds the government through next Friday, November 17, and Congress continues to be unsettled on how it will proceed, injecting some uncertainty into the markets.

Despite these concerns, the overall US stock market continues on its bullish march upward that kicked off late last month—part of a larger year-long bullish trend dating back to October 2022. In fact, the S&P500 and Nasdaq capped off their own 8-day and 9-day winning streaks this week, respectively—their longest since November 2021.


Can the bulls keep winning next week or will high US Treasury Bond yields put downward pressure on the market by enticing investors into safer “defensive” investments like attractive bonds and money market funds?

SPY


QQQ

 

Ben’s trades this week


Big wheels keep on rolling

This week, I’m monitoring my open “wheels” I have in AMZN and AAPL. I've been “wheeling” SBUX with covered calls, however these shares were called away from me this week as they were "in-the-money" (the stock price rose above my strike price) and the ex-dividend date was on Wednesday. The buyer on the other side of my options contracts wanted to own these shares by the ex-dividend date to capture those dividends and decided to exercise their options. This is a bummer that I missed out on receiving dividends this quarter on those SBUX shares, but serves as a good lesson when you sell covered calls with expiration dates near the stock’s ex-dividend date.


Buying back and rolling out

With travel I have coming up, I didn’t want to have to check on my open positions while enjoying my margarita poolside. I decided to buy back to close some of my cash-secured puts early that were already 50% or more profitable to lock in my gains and shut out my worry. I also rolled out other positions that weren't profitable enough yet to future weeks or months after I return from traveling.

I also sold-to-close out my LEAPS calls in AMZN and AAPL for 5-10% gains. I don’t know about you all, but sometimes I hear Mr. Greed on my shoulder tempting me to let my LEAPS climb just a little bit further... This is why I set my own rules and guidelines for disciplined trading, including automatically closing out my LEAPS once they’ve hit that 10% gains mark. Remember: any money is good money in the stock market.


Dollar-cost averaging and the Golden Crossover

With the market looking bullish and the 50-day moving average crossing above the 200-day--called a Golden Crossover indicator--for both SPY and QQQ, I decided to buy a few shares of each index. See those weekly charts above, where the yellow trend line rises above the blue trend line.


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 financial professionals a small cut to decide which stocks to buy and sell, saving me from hours of research.


Trade 1: AMZN cash-secured put (Call to Leap Level 1)

Expiration Date: December 22, 2023

Step 1: Have $13,500 cash as collateral Step 2: Sell 1 $135 strike put option (delta 0.22) for $1.74/share

Credit/premium received: $174/contract (minus fees and commissions)

AMZN had a strong week and currently experiencing a bullish trend, including a golden crossover. I'm pretty bullish on the stock right now in the short-term.

Trade 2: AMD cash-secured put (CTL Level 1)

Expiration Date: December 15, 2023 (Note: different expiration date than Trade 1)

Step 1: Have $11,000 cash as collateral Step 2: Sell 1 $110 strike put option (delta 0.25) for $2.49/share

Credit/premium received: $249/contract (minus fees and commissions)


AMD has also had a few very bullish weeks. Remember: trading in more volatile stocks like AMD isn't for everyone. The stock price tends to move faster, both up and down, compared to more stable, less volatile stocks. However, the positive tradeoff for stomaching that higher volatility is higher premiums for us option sellers, typically.


Trade 3: AMZN LEAPS call (CTL Level 2)

Expiration Date: December 19, 2025

Step 1: Buy 1 $120 strike LEAPS call option (delta 0.79) for $47.95/share

Debit/premium paid: $4795/contract (plus fees and commissions)


Be careful not to overextend your portfolio with LEAPS options. They are more risky strategies that can go nicely in our favor during bullish times, but can work quickly against us as well. I like to use the money the market has given me from selling covered calls and cash-secured puts to buy LEAPS calls. That way, if the LEAPS option loses value, I haven't lost any of my own original money.


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


📌Join Our Discord 💬


Investing, trading, and building wealth was a lonely journey for me. This is why my team and I created a Discord group for you and the other members to shares ideas and support one another. You don't have to go through it alone as we're all here to help. 😉


You can sign up here.


If you need help, feel free to send us a message.


Coming from a teacher's perspective, I believe it's important to engage in conversations with people who are also seeking to reach financial freedom.


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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