Hey Wealth Builders!
Once again, we experienced major volatility in the markets with the broad indices ending flat.
This week, I give market updates for Standard and Premium members in a video format, rather than my usual written posts. You can find the video on the Dashboard.
In a nutshell, here's what it looked like for the overall markets:
Here's SPY:
Here's QQQ:
Here's DIA:
Ask Steve 💭
Let's see what some of our members asked this week. Here are the top questions we received:
Abby
Q: I am using Ameritrade to sell my first covered call. I notice that when choosing a strike price and expiration date, I'm not sure what the premium would be. How do I see or estimate what the premium would be if it sells?
A: When we are on the option chain, we should see a "bid" and an "ask" column. We can receive premium that is in between these two numbers. The way that premiums are calculated are as follows: If you see "3.00" in the bid column, this is 3.00 x 100 shares, which would be $300 in premium. If you see 2.66, this is 2.66 x 100 shares, which would be $266 in premium. When you select the bid price and then market order, it should execute at the next available price, whatever that may be. When we sell a covered call, we automatically get premium once the trade is executed. If the bid price is 2.50 and the ask is 3.00, we can use trial and error to get more premium. For example, we can set a limit sell at 2.75 or 2.80 to receive more premium, rather than 2.50. Keep in mind it may take a while to execute if you do this. If your trade does not go through, you can cancel your initial order and try to sell for a lower premium.
Consider checking out my tutorial videos where I execute the wheel strategy on TD Ameritrade's Think or Swim Web Platform. It can be found in my past video archive on the main Dashboard.
James
Q: I'm thinking of starting a covered call on SBUX. What are your thoughts?
A: I would not start any wheels at the moment. Feel free to refer back to my previous membership positions and this week's video for more information.
Amanda
Q: I sold a covered call and saw that the call went down in value. I used your buy back and roll out technique and received more premium by selling a call for a further expiration date. Did I do this strategy correctly?
A: You got it! You can keep selling calls against your initial shares. If the call option contract decay in value, you can consider closing your positions and reselling further dated contracts for more premium. Hang in there. We will get through this volatility together!
Submit Your Questions 🙋♂️🙋♀️
Have any other questions? Before asking me and my team, feel free to check out our Level 1 FAQ. This FAQ is located on the Dashboard. You might find what you're looking for. 😊
If you do have questions, make sure to ask them on our Dashboard, rather than asking us via email. We also encourage you to watch all of the core video content and some of the past archived videos, read past Membership Positions, and take all the quizzes before sending us your questions.
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. 😉
Make sure to check it out on the bottom of your "Dashboard" and follow the instructions on how to sign up. 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.
Have a great weekend!
-Steve and the 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.