Monday, May 22, 2023. How our fearless, intrepid investor made out last week and what she will do today

Today, Victoria Day, is a stock market holiday in Canada. We encourage our members to invest in the New York Stock Exchange which has had the best performance over many decades. It is open today.

Our fearless, intrepid investor took a long weekend holiday with no market activity last week. She held covered call positions on SPY and SCHB (SCHWAB US BROAD MRKT-ETF) in three tax-advantaged portfolios and one margin account.

The market rose during the week. Covered call positions don’t work as well in a rising market as simply holding the underlying security does. In a rising market, investors would be assigned, and their underlying security would be called away from them requiring them to sell it below market price.

In such cases, investors get into cash and are in a position to sell cash-covered puts, the ideal situation. American investors can do so in their tax-advantaged portfolios. Canadian investors are not allowed to sell cash-covered puts in their tax-advantaged portfolios; therefore our fearless, intrepid investor maintains a margin account where she can do that.

So she sold just in-of-the-money, cash-covered puts on SCHB  in that account.

SCHB trades just below $50 a share, allowing investors to purchase board lots under $5,000 each.

Trading at just under $420 a share, investors need to commit about $42,000 to buy a board lot of SPY.

She holds SPY and three tax-advantaged accounts.

So, how did she make out last week, and what will she do today when the market opens?

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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