Hey Members!
Wow! What a green week for the markets! It looks like we had a nice bounce from our mini pullback last week.
Here's a snapshot of how the overall markets did:
Here are some notable price movements in the stocks we're trading:
Advanced Micro Devices AMD
Monday Open: $86.83
Friday Close: $87.90
Microsoft MSFT
Monday Open: $235.06
Friday Close: $242.20
Apple AAPL
Monday Open: $133.75
Friday Close: $136.76
Nike NKE
Monday Open: $135.37
Friday Close: $145.11
Trade of the Week:
If your covered calls expired worthless, you can sell another call against your shares at the same strike you chose last month. If you were assigned the 100 shares from your cash-secured put, you can now convert your trade into a covered call by selling at the same or 1-2 strikes above what you chose last month.
We know that many of you may have been assigned your AMD shares from your CSPs or if you started with a CC, your shares were not called away this week. Don't worry about AMD's pullback over the past couple of days. It's normal for semiconductor stocks to fluctuate wildly in price in the short term. Go ahead and sell another call on your shares at the strike you previously sold it at for around 4-5 weeks until expiration.
If you're a beginner, we recommend you starting off with selling cash-secured puts around 1-2 strikes OTM. This is typically a conservative starting point when starting the Wheel Strategy. However, if you're more experienced, bullish about the markets, and have been using the Wheel Strategy for some time, we recommend restarting by selling a covered call around 1-3 strikes OTM to not only receive the premium, but also make capital gains if you are called away at expiration.
Here are some trade recommendations and see what fits your personal risk-tolerance:
Starting a New Wheel: Selling a Cash-Secured Put on MSFT - MSFT's Current Price: $242.20 - Capital needed: $24,000.00 - Sell at the Expiration Date: 2021-03-05 - Select the Strike: $240.00 - Premium you'll receive: $562.50 - Cost basis: $240.00 - $5.62 = $234.38
Starting a New Wheel: Selling a Covered Call on MSFT - MSFT's Current Price: $242.20 - Capital needed: $24,220.00 - Sell at the Expiration Date: 2021-03-05 - Select the Strike: $242.50 - Premium you'll receive: $597.50 - Cost basis: $242.20 - $5.97 = $236.22
Starting a New Wheel: Selling a Cash-Secured Put on AAPL - AAPL's Current Price: $136.76 - Capital needed: $13,600.00 - Sell at the Expiration Date: 2021-03-05 - Select the Strike: $136.00 - Premium you'll receive: $415.00 - Cost basis: $136.00 - $4.15 = $131.85
Starting a New Wheel: Selling a Covered Call on AAPL - AAPL's Current Price: $136.76 - Capital needed: $13,676.00 - Sell at the Expiration Date: 2021-03-05 - Select the Strike: $137.00 - Premium you'll receive: $450.00 - Cost basis: $136.76 - $4.50 = $132.26
Starting a New Wheel: Selling a Cash-Secured Put on AMD - AMD's Current Price: $87.90 - Capital needed: $8,750.00 - Sell at the Expiration Date: 2021-03-05 - Select the Strike: $87.50 - Premium you'll receive: $407.50 - Cost basis: $87.50 - $4.08 = $83.42
Starting a New Wheel: Selling a Covered Call on AMD - AMD's Current Price: $87.90 - Capital needed: $8,790.00 - Sell at the Expiration Date: 2021-03-05 - Select the Strike: $88.00 - Premium you'll receive: $405.00 - Cost basis: $87.90 - $4.05 = $83.85
Starting a New Wheel: Selling a Cash-Secured Put on NKE - NKE's Current Price: $145.11 - Capital needed: $14,500.00 - Sell at the Expiration Date: 2021-03-05 - Select the Strike: $145.00 - Premium you'll receive: $450.00 - Cost basis: $145.00 - $4.50 = $140.50
Starting a New Wheel: Selling a Covered Call on NKE - NKE's Current Price: $145.11 - Capital needed: $14,511.00 - Sell at the Expiration Date: 2021-03-05 - Select the Strike: $146.00 - Premium you'll receive: $377.50 - Cost basis: $145.11 - $3.77 = $141.34
Starting a New Wheel: Selling a Cash-Secured Put on PINS
- PINS's Current Price: $81.96
- Capital needed: $8,150.00
- Sell at the Expiration Date: 2021-03-05
- Select the Strike: $81.50
- Premium you'll receive: $525.00
- Cost basis: $81.50 - $5.25 = $76.25
Starting a New Wheel: Selling a Covered Call on PINS
- PINS's Current Price: $81.96
- Capital needed: $8,196.00
- Sell at the Expiration Date: 2021-03-05
- Select the Strike: $82.00
- Premium you'll receive: $577.50
- Cost basis: $81.96 - $5.78 = $76.18
Earnings 📅
We had some great earnings reports from one of our favorite companies, PayPal PYPL, and our newest investment/trade, Pinterest PINS.
PayPal | PYPL
PYPL announced that their quarterly revenue came in at $6.12 billion, which is up 23% year-over-year, and a total of $21.45 billion for the year, which is up 22% year-over-year. PayPal added 16 million new accounts in the fourth quarter, brought its total client base to 377 million accounts, continued its momentum from earlier in the year, and had a 39% jump in total payment volume. You can see that PayPal really milked all those nice profits from those digital transactions!
Remember, PYPL makes money from taking a little slice of each digital transaction there is on their platform. Can you imagine all that money they get every day?
Here's a look at the 1-year chart of PYPL:
Pinterest | PINS
PINS announced that their quarterly revenue came in at $706 million. The company’s total U.S. revenue jumped 67% year over year, to $582 million. Its international revenue was up 145% year over year, to $123 million. Pinterest said the increases in both groups were driven by a growth in average revenue per user. Pinterest said that its U.S. monthly active users came in at 98 million, an increase of 11% year over year. The company’s international user base also continued to rapidly expand, up 46% to 361 million.
Here's a look at the 1-year chart of PINS:
What is Pinterest? Pinterest helps users to search, save, and share the content related to their interest. This itself has created a niche which can be tapped by marketers. Unlike other networking platforms, which have a primary motive of connecting people with others, Pinterest connects people with actual content related to their interests. This results in a better click-through rate on advertisements and more conversions.
How does PINS make money? Pinterest makes its money via advertising, specifically, Promoted Pins, which is Pinterest's primary source of revenue. Promoted Pins are effectively advertisements, paid for by identified sponsors. Like in TikTok, Instagram, and Facebook feeds, these Promoted Pins look very similar to Standard Pins, as they would from ad posts to regular posts. Like with many online platforms, Pinterest utilizes user data to target advertisements based on user interests and searches, as well as other demographics.
Here's an infographic provided by Hello Society:
Pinterest's revenue is driven by interest and use of its platform, which is increasingly popular among home, fashion, and beauty brands. Many Pinterest users are overwhelmingly female and have above average incomes, using its platform as an e-commerce gateway is more than ideal.
PINS is a relatively new company, is not currently part of the S&P500, and does not pay a dividend. It's a more volatile stock, so if you want to consider investing in it, do so with caution, and slowly scale in with around 1-5 shares. We want to make sure that this kind of investment suits your personal risk tolerance.
Also, if you want to utilize PINS as more of a trade due to it's higher IV and therefore, higher premiums, you can do so.
If you haven't noticed already, we love companies that are dominating the digital world. 😉
Discord Launched! 💬
Make sure to check it out on the bottom of your "Dashboard" and follow the instructions on how to sign up.
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.
Keeping You Accountable
Just checking in. Are you consistently setting aside money from your paycheck and depositing it into your account each week or each month? If so, can you slowly increase the amount for this month and for future months? What are you doing with your Wheel Premiums? Are you reinvesting the premiums into long-term holding stocks? Are you really researching the stocks you're buying by looking at their fundamentals and increasing revenues? Or are you just buying into the hype?
Only you know the answers to these questions. 😉
Stay amazing, everyone! Great things are coming your way!
- Call to Leap Team
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.