Monday, November 21, 2022. How our fearless, intrepid investor made out last week and her plans for today

Our fearless, intrepid investor spent two weeks sailing on a 42-foot catamaran in the British Virgin Islands with no internet connection. Knowing this would be the case, she wrote covered calls on SPY, strike price $10.00 out of the money, expiry date three weeks away instead of her usual one week away. (SPY C 18NOV22 396.00)

She was assigned and made 1.1% on her investment. You can’t go broke taking a profit.

During the same time, the market, as represented by SPY, went up 5.17%!!

Two points here. First, there will always be investments that are better than the ones you just made. And second, simply buying and holding an exchange-traded fund that tracks the S&P 500, SPY is ideal, is an effortless way to do well. With huge fluctuations. That is why the money which we will need in the next few years does not belong in the market.

As we frequently state, historically, 1.) over the long term, 2.) properly selected US market index exchange-traded funds, 3.) held in tax-advantaged accounts, 4.) in an appropriate asset allocation, have been the investors best way for growing savings and are likely to remain so for many years.

She did lose $US10,990.00 in her “fun” portfolio over one year, writing just out-of-the-money covered calls on Novavax (NVAX) on Mondays, expiry dates on Fridays of the same week.

What she learned from her NVAX experience is 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!

Using that approach, she has done well, being assigned occasionally, like the BVI case you see above.

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

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