Hey Investors and Traders!
The news just got in and Joe Biden has won the presidency! 🚀So what does this mean for the stock market? Well, we have some ideas, but let's talk about numbers first. 😉
Here are some notable price movements in the stocks we're trading:
Advanced Micro Devices AMD
Monday Open: $75.85
Friday Close: $85.88
Microsoft MSFT
Monday Open: $204.29
Friday Close: $223.72
Apple AAPL
Monday Open: $109.11
Friday Close: $118.69
Trade of the Week:
Since we had a huge green week, there is a good chance that your cash-secured puts expired worthless or your shares were called away if you were in a covered call trade. This means that banked anywhere from $400-800 per contract if you sold about a month ago. Nice! 😃
If you are more bullish, you can consider starting your Wheel with a covered call trade. You can even consider selling 2 strikes OTM, so you can make more capital gains (the difference between the price you bought the shares to the strike you choose).
If you are a little more cautious or you are a beginner in using the Wheel Strategy, we recommend starting your Wheel by selling cash-secured put 1 strike OTM.
Below are some recommendations. Feel free to choose how you want to enter your Wheel:
Starting a New Wheel: Selling a Cash-Secured Put on MSFT
- MSFT's Current Price: $223.72
- Capital needed: $22,250.00
- Sell at the Expiration Date: 2020-12-04
- Select the Strike: $222.50
- Premium you'll receive: $637.50
- Cost basis: $222.50 - $6.38 = $216.12
Starting a New Wheel: Selling a Covered Call on MSFT
- MSFT's Current Price: $223.72
- Capital needed: $22,372.00
- Sell at the Expiration Date: 2020-12-04
- Select the Strike: $225.00
- Premium you'll receive: $582.50
- Cost basis: $223.72 - $5.83 = $217.90
Starting a New Wheel: Selling a Cash-Secured Put on AMD
- AMD's Current Price: $85.88
- Capital needed: $8,550.00
- Sell at the Expiration Date: 2020-12-04
- Select the Strike: $85.50
- Premium you'll receive: $407.50
- Cost basis: $85.50 - $4.07 = $81.42
Starting a New Wheel: Selling a Covered Call on AMD
- AMD's Current Price: $85.88
- Capital needed: $8,588.00
- Sell at the Expiration Date: 2020-12-04
- Select the Strike: $86.00
- Premium you'll receive: $410.00
- Cost basis: $85.88 - $4.10 = $81.78
Starting a New Wheel: Selling a Cash-Secured Put on AAPL
- AAPL's Current Price: $118.69
- Capital needed: $11,800.00
- Sell at the Expiration Date: 2020-12-04
- Select the Strike: $118.00
- Premium you'll receive: $385.00
- Cost basis: $118.00 - $3.85 = $114.15
Starting a New Wheel: Selling a Covered Call on AAPL
- AAPL's Current Price: $118.69
- Capital needed: $11,869.00
- Sell at the Expiration Date: 2020-12-04
- Select the Strike: $119.00
- Premium you'll receive: $410.00
- Cost basis: $118.69 - $4.10 = $114.59
Digital Payment Stocks
Cha-ching! 💸 Looks like our favorite digital payment stocks PayPal PYPL and Square SQ blew Wall Street away with their incredible earnings this past week. If you look around, we are entering a cashless society with people paying each other through Venmo, which PayPal owns, and merchants using Square having their customers pay online. COVID or no COVID, this is the trend that our world is progressing towards, which is good for us investing in these solid companies.
If you want to take a look at the details of these companies, check out our latest Earnings Recap we posted this week. You'll be amazed at how much revenue came in for them this quarter!
Final Thoughts:
Okay, so let's talk about what's going on in everyone's mind, "What is going on with the Presidency and what does it mean for the stock market?" On Tuesday, November 3, 2020, we saw a rally in all major indices, pushing a lot of our favorite stocks 5% and higher throughout the week. According to the Associated Press on Saturday, November 7, 2020, Joe Biden now has the most electoral votes and is now President-elect of the United States.
Let's take a look at what happened in the SPY this week when this news was broken out:
As you can see, we had some gap ups the past couple of days from all the enthusiasm from the election. Based on just looking at the technicals, it's possible that some stocks might take a breather from the incredible run up and pullback a little to fill in the gaps in the short term. From there, we expect stocks to retrace back and start to make new all-time highs. However, if market sentiment is still good, it is also possible that we break out of our channel.
Regardless of what happens in the short term, Call to Leap is bullish for the upcoming months!
Now before you get too excited, this doesn't mean that you should dump all of your savings into the stock market. It's best to stay disciplined and scale in slowly by letting your favorite stocks rise 5-10% before adding anymore shares. Keep in mind that President Trump is still our president and can still make his Tweets. If you've been following the news, the Trump administration is contesting the election results, which may cause some rocky roads ahead. We are also going to keep track to see if the rising COVID cases and stimulus talks are going to affect market sentiment the next couple of weeks or if it'll be ignored by the excitement surrounding the election results.
Remember, the stock market loves to go up, especially when uncertainty is gone and when companies do strongly in their earnings, which we saw these past 2-3 weeks. 😄
Stay positive and hopeful. 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.