The Monday morning program encourages passive investing by buying an exchange-traded fund that tracks the S&P 500. (SPY Is an excellent example.) Known as index investing, historically, over the long term, it has been most investor’s best way for growing savings and is are likely to remain so for many years.
However, many of our members are interested in puts and calls so we write about that once in a while.
On Monday, November 9, we wrote about a Monday Morning Program member who lost $232,407.50 in a $500,000 portfolio when her Novavax (NVAX) shares quickly dropped by over 50%. She paid over $174 each for them, having bought them because the premiums on covered calls were attractive.
To regain her losses, she sold just out-of-the-money covered calls on NVAX every Monday after that, with expiry date on Friday of the same week. By November 13, she brought her losses from $232,407.50 down to $26,341.25!! Something to cheer about.
However, at the market close on Monday, November 16, NVAX shares dropped from $96 per share to $85 per share, bringing her losses back up t0 $103,984.05. That is an improvement on the original loss of $232,407.50 but is going in the wrong direction.
Encouraged by her experience of selling just out-of-the-money covered calls on NVAX every Monday with expiry date on Friday of the same week, she plans to continue doing that.
At the close of the market last Friday, November 20, the bid-ask range for just out-of-the-money NVAX calls was $3.20/$3.65. Based on that, she will collect a premium of $12,691.00. ($3.43, that is halfway between $3.20 and $3.65 multiplied by 37 contracts, or 3,700 shares).
She sees her NVAX shares as a money tree. Regardless of the value of the money tree at any time, it is throwing off cash on an ongoing basis.
We will keep you posted.
We have designed the Monday Morning Millionaire Program to offer abstracted investment education. Over the last two decades, the program has outperformed over 90% of portfolios, including professionally managed ones.
The program does not provide any investment advice or endorsements.
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