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Fundamentals
Realistic Strategies, Realistic Returns

September 1, 2022

We currently own the GLD January 19, 2024, 145 call LEAPS contract at $37.00. You must own LEAPS in order to use this strategy.

ALL-WEATHER PORTFOLIO

SPDR Gold Trust ETF (GLD)

We currently own the GLD January 19, 2024, 145 call LEAPS contract at $37.00. You must own LEAPS in order to use this strategy.

If you wish to enter the position and are uncertain about which LEAPS to purchase, please refer to the reports section of your subscriber page or our latest subscriber-exclusive webinar in which I go through the process, step by step, of entering a new position of an already established position. Based on our approach, the LEAPS contract that works best is the one with a current delta of 0.80: the January 19, 2024, 135 calls. We typically initiate a LEAPS position, with a delta of roughly 0.80, that has roughly 18 to 24 months left until expiration.

Here is the trade:

Buy to close GLD September 16, 2022, 169 call for roughly $0.07 or less (adjust accordingly, prices may vary from time of alert)

COI_F_090122_GLD_close

Once that occurs (or if you are new to the position and already own LEAPS):

Sell to open GLD October 21, 2022, 165 call for roughly $1.45 or more (adjust accordingly, prices may vary from time of alert)

COI_F_090122_GLD_open

Premium received: 3.9%

Once the initial LEAPS purchase occurs, we maintain the position and focus on selling near-term call premium against our LEAPS, lowering the original cost basis of $37.00 (or the price at which you purchased your LEAPS) with each and every transaction.

We can continue to sell calls against our LEAPS contract every month or so to lower the total capital outlay. But remember, options have a limited life, so when we get closer to the LEAPS contract’s expiration, we will simply sell the contract and use the proceeds to continue our poor man’s covered call strategy in GLD.

Vanguard Total Stock Market (VTI)

We currently own the VTI January 19, 2024, 145 call LEAPS contract at $54.50. You must own LEAPS in order to use this strategy.

If you wish to enter the position and are uncertain about which LEAPS to purchase, please refer to the reports section of your subscriber page or our latest subscriber-exclusive webinar in which I go through the process, step by step, of entering a new position of an already established position. Based on our approach, the LEAPS contract that works best is the one with a current delta of 0.80: the January 19, 2024, 150 calls. We typically initiate a LEAPS position, with a delta of roughly 0.80, that has roughly 18 to 24 months left until expiration.

Here is the trade:

Buy to close VTI September 16, 2022, 210 call for roughly $0.30 (adjust accordingly, prices may vary from time of alert)

COI_F_090122_VTI_close

Once that occurs (or if you are new to the position and already own LEAPS):

Sell to open VTI October 21, 2022, 205 call for roughly $3.00 (adjust accordingly, prices may vary from time of alert)

COI_F_090122_VTI_open

Premium received: 5.5%

Once the initial LEAPS purchase occurs, we maintain the position and focus on selling near-term call premium against our LEAPS, lowering the original cost basis of $54.50 (or the price at which you purchased your LEAPS) with each and every transaction.

We can continue to sell calls against our LEAPS contract every month or so to lower the total capital outlay. But remember, options have a limited life, so when we get closer to the LEAPS contract’s expiration, we will simply sell the contract and use the proceeds to continue our poor man’s covered call strategy in VTI.