Mon., Jan. 17, 2022. How our fearless, intrepid investor made out last week and her plans for today

New members, a sincere welcome to you all. In  December of 2021 we set a new enrolment record!

An earnest thank you to everyone who bought gift memberships. This low-cost ($C12.00) gift, appropriate for most people, can solve anyone’s gift-giving problems.

Here, we have another record.  Our 90-plus-year-old member Roy Brown, Founder of ROI Corporation ( gifted the 1-on-1 sessions ($C300 per session) to his 10 grandchildren, all grown adults.

Now, back to our fearless, intrepid investor who lost $65,700 in 2021 writing (selling) covered calls on NVAX in her “fun” portfolio.

How much fun do you think it was?

Last Monday, January 10, when the market opened, our fearless, intrepid investor sold 10 covered call NVAX contracts, strike price $5.00 out-of-the-money, expiry date Friday, January 14 (C 14JAN22 131.00). She received $4,010.00 immediate premium income while allowing $5.00 per share for growth, should it take place. The possible total was $9,400.00.

What did happen?

NVAX went from $133.81 on Monday down to $112 on Friday. That works out to a loss of $21.81 per share for a total loss of $21,810.00 for the week. ($21.81 times 1,000)

That was offset by the immediate premium income of $4,010.00 for a total loss of  $17,800.00. ($21,810.00 minus $4,010.00)

All in all, her “fun” portfolio is not much fun now. That is true of most portfolios that ignore one or more of the six habits which the Monday Morning Program promotes. Fortunately, she has enough sense to limit her “fun” portfolio to a small percentage of her overall stock market investments.

We know that the risk of writing cover calls entirely comes from the selected underlying security. Morningstar now states that NVAX is undervalued at a 43% discount — the highest undervaluation in memory for this security.

NVAX has assets that are worth much more and the price of the stock. It has a lot of cash and revenue is expected to rise 10 times from 2020 to 2022 — a true cigar butt stock.

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

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Dr. Milan Somborac

The Monday Morning Millionaire Program supports do-it-yourself (DIY) investors which I have been for over 50 years. About my team and me