by Ben Weiss, for the Call to Leap Team
The S&P 500 and Nasdaq indices once again achieved fresh all-time highs this week, however I'm continuing to take a measured approach for the near term as I explore in this week's Market News & Outlook.
Steve and I maintain a bullish outlook for the mid- and long-term. We've opened a few new options positions, but we're being careful not become overextended or overaggressive, given how top-heavy the major indices are right now. We're also investing in some long-term shares to continue building our positions in our favorite stocks and ETFs over time.
⚠️⚠️Some of the stocks/ETFs we traded this week are leveraged and riskier in nature. If leveraged ETFs and more volatile stocks aren't your style (totally ok!) and you're waiting for the market choppiness to settle down, now could also be a good time to build up your cash reserves or invest in your favorite long-term stock and index ETF holdings, which we do every week no matter how the market is behaving.⚠️⚠️
While we've made it through May and into June with significant bullish strength overall, summer months have historically been lower-performing months for the market. At CTL, Steve and I follow the dollar-cost average approach and try not to "time the market" and its ups and downs, however we shouldn't be surprised if we see a bit of slow down ahead. Overall, I'm with many investors in being bullish for the remainder of 2024, but we'll pay attention to the market trends and use the various tools in our options trading toolbox as needed.
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Ben’s trades this week
My AAPLs finally ripened... I had a few hundred shares of AAPL assigned to me from cash secured puts back in March at $190/share. After assignment, AAPL continued to dip lower almost to $160, so I began selling covered calls against my shares while I waited for the stock price to recover. AAPL finally went on a run over the past few weeks, and my previously out-of-the-money $180, $185, and $190 covered calls were now in-the-money. Even though I chose strike prices below the price I was assigned the shares ($190), the covered call premiums I had collected since March lowered my cost basis per share to well below $180 and $185. As I was already profitable thanks to all those premiums, I decided to roll out only 1 contract in each of my accounts (the highest strike prices) and let the other calls get assigned. I will remain exposed to AAPL for potential continued growth, but not be as overweight in AAPL stock within my portfolio. I can now take the cash freed up from call assignment and deploy it into new positions or hold it as cash. For the calls I chose to roll out, I went out a few months in expiration in order to roll the strike price up $5 for a credit:
Step 1: Buy to close June 21 $190 call
Step 2: Sell to open September 20 $195 call
and
Step 1: Buy to close June 21 $185 call
Step 2: Sell to open October 18 $190 call
Thank you, I'll take that... With widespread gains in the market this week, I was able to buy to close my PLTR put to capture 75% profit with over a month left to go until expiration. I also sold to close one of my AMZN LEAPS that had achieved +9% profit since opening about a month ago. I'm choosing to leave my other AMZN LEAPS open for the time being in case AMZN continues to advance upwards.
Jinx, buy me a Coke... I was assigned my KO June 21 $63 cash secured put on Thursday night, as KO share price was dipping just below $63. Interestingly, when the market opened Friday morning, the share price began climbing back over $63, even though I had already been assigned the shares. I decided to quickly sell a same-day expiration covered call at $63 to attempt to get my shares called away from me after only 1 day of ownership. I earned a few more dollars in quick premium, however KO ended up closing back below $63 on Friday so my same-day covered call expired worthless. No problem! I made a few quick bucks and I'll look to sell a standard 2-4 week covered call this coming week.
New Trade 1: CMCSA covered call (CTL Level 1)
Expiration Date: September 20, 2024 (a "monthly" expiration)
Step 1: Have 100 shares of CMCSA as collateral
Step 2: Sell to open 1 $40 strike call option (delta 0.40) for $1.28/share
Credit/premium received: $128/contract (minus fees and commissions)
Thoughts: I went out about 3 months in expiration to collect more extrinsic time value. I have another lot of 100 shares of CMCSA which I'm considering selling out of, since CMCSA is in a longer-term decline now. The stock has its next ex-dividend date on July 3 so I will make a decision to hold or sell after that point so I'm sure to at least collect the quarterly dividend.
New Trade 2: NVDA cash-secured put (CTL Level 1)
Expiration Date: July 19, 2024 (a "monthly" expiration)
Step 1: Have $11,800 cash as collateral
Step 2: Sell to open 1 $118 strike put option (delta 0.27) for $2.35/share
Credit/premium received: $235/contract (minus fees and commissions)
Thoughts: Our first time trading NVDA after its 10:1 split! During the week, I actually sold the $115 put and bought it back the next day for a quick profit. Soon after, I re-entered by selling the $118 put given NVDAs climb up. Since then, NVDA has dropped back down. NVDA is a more volatile stock and a fast mover but premiums are higher as a reward if you're comfortable with the higher risk.
New Trade 3: DELL cash-secured put (CTL Level 1)
Expiration Date: July 19, 2024 (a "monthly" expiration)
Step 1: Have $13,500 cash as collateral
Step 2: Sell to open 1 $135 strike put option (delta 0.25) for $2.90/share
Credit/premium received: $290/contract (minus fees and commissions)
Thoughts: DELL had a strong, exponential run up in May but has since retraced back down into a more reasonable trading channel. I'm bullish on DELL and I see nice support at the $135 level corresponding to recent highs in March, April, and May.
New Trade 4: SOXL cash-secured put (CTL Level 1) See caution below Updated 6/24/2024, 1:30pm ET: Corrected expiration date from July 12 to July 19. The $49 strike remains unchanged. If you already took the July 12 expiration, that isn't a bad trade either!
Expiration Date: July 19, 2024 (a "monthly" expiration)
Step 1: Have $4,900 cash as collateral
Step 2: Sell to open 1 $49 strike put option (delta 0.28) for $2.32/share
Credit/premium received: $232/contract (minus fees and commissions)
Thoughts: The semiconductor sector has shown great strength recently, though the ETF took a breather this week so I took the opportunity to sell a put for higher premium. I chose a strike price a bit further out of the money in case SOXL continues to drop. Also, this leveraged ETF moves quickly so I'm ok giving it more room to move up and down before my strike is challenged. SOXL is a 3x leveraged ETF that tracks the semiconductor industry. Similarly to TQQQ and TNA, this ETF moves very fast, both up and down, but can also be a less capital intensive way to get exposure to the semiconductor sector, compared to SOXX, SMH, and other more expensive ETFs. I only trade volatile leveraged ETFs when I'm confident I'll be able to monitor my positions throughout the week. If you're a once-a-week or month "set it and forget it" style trader, this ETF may not be for you. 🚨🚨Caution: Trading options on leveraged ETFs is a more advanced and risky strategy and not for everyone, especially beginners not yet comfortable with buying-to-close (BTC) and rolling options. Please consider/tweak these positions as they fit your risk tolerance and trading style.🚨🚨
In it for the long-haul... 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
Got it covered... I sold a fresh round of covered calls against some of my long-term shares:
MA: Sold to open July 26 $485 call
MSFT: Sold to open July 26 $485 call
DIS: Sold to open August 16 $120 call (I'm still trying to use covered calls to be paid to exit out of my DIS shares)
Keeping my eye on AMZN... Last week, I was considering selling "Poor Man's Covered Calls" against my AMZN LEAPS I've held for a few weeks as the LEAPS haven't gained profit yet. However, with AMZN stock movement starting to pick up, I'd rather wait to see what happens. If the stock breaks out above $190-19,5 I may sell some more CSPs instead.
👩🎓📖Want to learn more about PMCCs? Let's learn together on Discord!
Steady as we go...I continued adding shares to my long-term positions this week, including some of my favorite stocks like WMT and COST, and my favorite ETFs, including SPY, QQQ, and SCHD.
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. 🙌🏻
- Steve & Ben
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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