Monday, January 30, 2023. How our fearless, intrepid investor made out last week and her plans for today

The most important thing to learn from our fearless, intrepid investor’s loss of $US10,990.00 in her “fun” portfolio over a year is not to write covered calls on individual securities. She sold just out-of-the-money covered calls on Novavax (NVAX) on Mondays, expiry dates on Fridays of the same week. NVAX declined to a far greater extent than the premium income she received for that transaction.

It is far better to sell covered calls on the American market as a whole by using an exchange-traded fund (ETF) that tracks the S&P 500. SPY is the best. It is the largest, oldest, and most heavily traded US ETF. It has the narrowest bid/ask spread, one of investors’ expenses that most tend to ignore.

Also, writing (selling) covered calls sufficiently out-of-the-money to earn about 1% per month or slightly more, significantly reduces the possibility of being assigned while yielding a decent return.

What will she do today when the NYSE opens at 9:30 AM?

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Monday, January 23, 2023. How our fearless, intrepid investor made out last week and her plans for today

In previous posts, we mentioned that our fearless, intrepid investor lost $US10,990.00 in her “fun” portfolio over one year by writing (selling) just out-of-the-money covered calls on Novavax (NVAX) on Mondays, expiry dates on Fridays of the same week. How much fun is that?

She ignored habit number three, which recommends that investors buy the American market and not pick individual stocks. Investors can buy the American market by acquiring an exchange-traded fund (ETF) that tracks the S&P 500.

SPY is the best. It is the largest, oldest, and most heavily traded US ETF. It has the narrowest bid/ask spread, one of investors’ expenses that most tend to ignore.

All risk in selling covered calls comes from the market movement of the underlying security. When she owned NVAX, it dropped significantly more than the premium income she received. So, no more writing covered calls on individual securities for her.

Further,  she decided to write (sell) covered calls sufficiently out-of-the-money to earn about 1% per month or slightly more. That would significantly reduce the possibility of being assigned while yielding a decent return!

What did she do last Tuesday, January 17, 2023? (Monday, January 16, NYSE was closed for Martin Luther King Jr. Day.)

She sold covered calls on SPY at a strike price of $US5.00 out-of-the-money, that is, $US404.00, expiry date Friday, January 20 (SPY C 20JAN23 404.00 US). She earned $US0.83 per share – much less than the previous week’s premium income which was $US1.22 per share. Nevertheless, it still is guaranteed,  immediate and decent. 

What will she do today when the NYSE opens at 9:30 AM?

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Tuesday, January 17, 2023. How our fearless, intrepid investor made out last week and her plans for today

Yesterday, Monday, January 16, was a New York Stock Exchange holiday. Hence we are reporting on Tuesday this week.

In previous posts, we mentioned that our fearless, intrepid investor lost $US10,990.00 in her “fun” portfolio over one year by writing (selling) just out-of-the-money covered calls on Novavax (NVAX) on Mondays, expiry dates on Fridays of the same week. How much fun is that?

She ignored habit number three, which recommends that investors buy the American market and not pick individual stocks. Investors can buy the American market by acquiring an exchange-traded fund (ETF) that tracks the S&P 500.

There are more ETFs now than there are individual securities, but only half a dozen or so track the S&P 500.  SPY is the best. It is the largest, oldest, and most heavily traded US ETF. It has the narrowest bid/ask spread, one of investors’ expenses that most tend to ignore.

All risk in selling covered calls comes from the market movement of the underlying security. When she owned NVAX, it dropped to a greater, far greater, extent than the premium income derived from selling covered calls on the security. So, no more writing covered calls on individual securities for her.

Further,  she decided to write (sell) covered calls sufficiently out-of-the-money to earn about 1% per month or slightly more. That would significantly reduce the possibility of being assigned while yielding a decent return!

What did she do last Monday, January 9, 2023?

She sold covered calls on SPY at $8.00 out-of-the-money, expiry date Friday, January 13, (CALL-100 SPY’23 13JA@402.

SPY rose by just under $8.00 last week, giving her a decent, safe return.

What will she do today when the NYSE opens at 9:30 AM?

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Monday, January 9, 2023. How our fearless, intrepid investor made out last week and her plans for today

In previous posts, we mentioned that our fearless, intrepid investor lost $US10,990.00 in her “fun” portfolio over one year by writing (selling) just out-of-the-money covered calls on Novavax (NVAX) on Mondays, expiry dates on Fridays of the same week. How much fun is that?

She ignored habit number three, which recommends that investors buy the American market as a whole and not pick individual stocks. Investors can buy the American market as a whole by acquiring an exchange-traded fund (ETF) that tracks the S&P 500. 

There are more ETFs now than there are individual securities, but only half a dozen or so track the S&P 500.  SPY is the best. It is the largest, oldest, and most heavily traded US ETF. It has the narrowest bid/ask spread, one of investors’ expenses that most tend to ignore.

All risk in selling covered calls comes from the market movement of the underlying security. When she owned NVAX, it dropped to a greater, far greater, extent than the premium income derived from selling covered calls on the security. So, no more writing covered calls on individual securities for her.

Further,  she decided to write (sell) covered calls sufficiently out-of-the-money to earn about 1% per month or slightly more. That would significantly reduce the possibility of being assigned while yielding a decent return!

What did she do last Monday?

She sold covered calls on SPY at $8.00 out-of-the-money, expiry date Friday, January 6 (

SPY rose by just under $8.00 last week, giving her a decent return.

What will she do today when the markets open at 9:30 AM?

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Rejoice! The market is down! Bargain territory! V2

On September 2 of this year, we sent out the post you see below. Since that time, the market has fallen further.  The material is worth reviewing.

Considering that the money that you will need in the next few years does not belong in the market, if you have not bought into this bargain territory, think about doing so now.

________________________________________________________________________

The S&P 500 is down over 17% year-to-date. Bargain territory! If you have not re-balanced your core portfolio to take advantage of the bargain, consider doing so.

The Muppets are running for the doors. The same people who look for bargains when buying their groceries or clothes for the children or airplane tickets or looking for parking spots are ignoring this bargain.

Muppets (stupid and ineffectual people)? The second largest investment bank, Goldman Sachs, uses the term to describe its clients.

From Greg Smith’s Why I Am Leaving Goldman Sachs: “I attend derivatives sales meetings where not one single minute is spent asking questions about how we can help clients. It’s purely about how we can make the most possible money off of them.”

Investment banks are not our friends. We need to be aware of that even though we do need them to execute our buy/sell orders.

Don’t be fooled by the fact that year-to-date, the Toronto Stock exchange has declined less than the S&P 500. Intelligent investors think long-term. Note the 10-year chart below.

With the habits of the Monday Morning Program, luck hardly matters. Good luck!

Tuesday, December 13, 2022. How our fearless, intrepid investor made out last week and what she did yesterday

We previously stated that writing (selling) just out-of-the-money covered calls on Novavax (NVAX) on Mondays, expiry dates on Fridays of the same week, our fearless, intrepid investor lost $US10,990.00 in her “fun” portfolio over one year.

The risk in selling covered calls entirely comes from the market movement of the underlying security. When she owned NVAX, it dropped to a greater, far greater, extent than the premium income derived from selling covered calls on the security.

What did she learn from that experience?

Two things!

First, pay attention to habit number three, which states buy the American market as a whole and do not pick stocks.

Secondly,  she learned to write (sell) covered calls sufficiently out-of-the-money to earn about 1% per month or slightly more. That would significantly reduce the possibility of being assigned!

What did she do when the NYSE opened at 9:30 AM yesterday?

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Hopes for 2023 US Market. December 2, 2022 Survey Results

Greetings members,
Why not give a Membership to a friend or loved one? It could be the perfect gift for Christmas… As a Member, you know how valuable it is!

Again, a thank you to all who gifted a membership or a one-on-one zoom meeting to friends and relatives.

And again, our sincere gratitude to all members who took the time to respond to our Friday, November 18 survey about what they hope the market does in 2023. Time is an irreplaceable resource. We appreciate your involvement.

“What do you hope for the US market in 2023?

Like most people, I hope that it rises.

25%

I hope that it drops to allow me to buy bargains.

28.6%

I don’t care. If it rises I will take profits. If it drops I will buy bargains.

46.4%

Investors who hope that the market will rise will be disappointed often. Investors who selected choice number two or three are only disappointed when the market moves laterally. It rarely does so.

We are delighted to note that 75% of our members are in that group and hope the other 25% start thinking that way.

You can read some helpful comments below.

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Monday, December 5, 2022. How our fearless, intrepid investor made out last week and her plans for today

We previously stated that writing (selling) just out-of-the-money covered calls on Novavax (NVAX) on Mondays, expiry dates on Fridays of the same week, our fearless, intrepid investor lost $US10,990.00 in her “fun” portfolio over one year.

The risk in selling covered calls entirely comes from the market movement of the underlying security. When she owned NVAX, it dropped to a greater, far greater, extent than the premium income derived from selling covered calls on the security.

She ignored habit number three, which is to buy the American economy as a whole by using an exchange-traded fund that tracks the S&P 500. That means no picking individual stocks.

Additionally,  she learned to write (sell) covered calls sufficiently out-of-the-money to earn about 1% per month or slightly more. That would significantly reduce the possibility of being assigned!

What will did she do when the NYSE opened at 9:30 AM today?

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