All-Weather Portfolio Alert (GLD, IEF, TLT)
With the August 18, 2023, expiration cycle coming to a close in seven days, it’s time to start buying back the rest of our August 18 short calls and selling more premium going out 30 to 60 days. I’ll be sending out numerous trade alerts for the various portfolios over the next few days, including the potential for a few more new trades in our active portfolios.
All of our portfolios continue to benefit from the ongoing bullish trend this year. Remember, inherently our positions are skewed to the upside (long delta), so bullish moves are always a welcome sight.
Also, a reminder, I will be holding my next subscriber-only webinar next week, Tuesday, August 15 at 12 p.m. ET. Click here to join. No worries, if you can’t make it, we always archive our webinars on your subscriber page so you can access them at your leisure.
SPDR Gold Shares ETF (GLD)
GLD is currently trading for 178.10.
In the All-Weather portfolio, we currently own the GLD January 17, 2025, 171 call LEAPS contract at $32.00. You must own LEAPS in order to use this strategy.
*If you are new to the position, based on our approach, the LEAPS contract that works best is the one with a current delta of 0.80: the January 17, 2025, 165 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 (you must own LEAPS in GLD before placing the trade, otherwise you will be naked short calls):
Once you have LEAPS in your possession:
Buy to close GLD August 18, 2023, 187 call for roughly $0.02 or more. (Adjust accordingly, prices may vary from time of alert.)
Once that occurs:
Sell to open GLD September 22, 2023, 183 call for roughly $1.19. (Adjust accordingly, prices may vary from time of alert.)
Premium received: 3.7%
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 $32.00 (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.
An alternative way to approach a poor man’s covered call, if you are a bit more bullish on the stock, is to buy two LEAPS for every call sold. This way you can benefit from the additional upside past your chosen short strike, yet still participate in the benefits of selling premium.
iShares Trust 7-10 Year Treasury Bond ETF (IEF)
IEF is currently trading for 94.50.
In the All-Weather portfolio, we currently own the IEF January 17, 2025, 85 call LEAPS contract at $16.35. You must own LEAPS in order to use this strategy.
*If you are new to the position, based on our approach, the LEAPS contract that works best is the one with a current delta of 0.80: the January 17, 2025, 85 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 (you must own LEAPS in IEF before placing the trade, otherwise you will be naked short calls):
Once you have LEAPS in your possession:
Buy to close IEF August 18, 2023, 98 call for roughly $0.03. (Adjust accordingly, prices may vary from time of alert.)
Once that occurs:
Sell to open IEF September 22, 2023, 96.5 call for roughly $0.50. (Adjust accordingly, prices may vary from time of alert.)
Premium received: 3.1%
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 $16.35 (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 IEF.
iShares 20+ Year Treasury Bond ETF (TLT)
TLT is currently trading for 95.77.
In the All-Weather portfolio, we currently own the TLT January 17, 2025, 85 call LEAPS contract at $24.05. You must own LEAPS in order to use this strategy.
*If you are new to the position, based on our approach, the LEAPS contract that works best is the one with a current delta of 0.80: the January 17, 2025, 75 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 (you must own LEAPS in TLT before placing the trade, otherwise you will be naked short calls):
Once you have LEAPS in your possession:
Buy to close TLT August 18, 2023, 104 call for roughly $0.02. (Adjust accordingly, prices may vary from time of alert.)
Once that occurs:
Sell to open TLT September 22, 2023, 99 call for roughly $0.98. (Adjust accordingly, prices may vary from time of alert.)
Premium received: 4.1%
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 $24.05 (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 TLT.
Just as a heads up, in my subscriber-only webinar on Tuesday of next week, I plan on spending some time on the ins and outs of getting started, if you are new to the service. That includes how to use your subscriber-only page as an important resource, your first trade and what to expect going forward, among many other topics.
I’ll also take things a step further by going over a typical trade on the trading platform, step by step. We’ll discuss, in great detail, the mechanics of the trade, how to figure out your profit, assignment concerns, etc.
The All-Weather Portfolio continues to shine in all market environments. The strategy might not offer the biggest upside, but it also doesn’t expose investors the huge downside risk. It’s simply a consistent performer through thick or thin. The goal is to obviously make a nice return, but with a smooth equity curve.
Vanguard Total Stock Market ETF (VTI)
VTI is currently trading for 221.32.
In the All-Weather portfolio, we currently own the VTI January 17, 2025, 165 call LEAPS contract at $55.05. You must own LEAPS in order to use this strategy.
If you are new to the position, based on our approach, the LEAPS contract that works best is the one with a current delta of 0.80: the January 17, 2025, 165 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 (you must own LEAPS in VTI before placing the trade, otherwise you will be naked short calls):
Once you have LEAPS in your possession:
Buy to close VTI August 18, 2023, 225 call for roughly $0.40 or more (adjust accordingly, prices may vary from time of alert)
Once that occurs:
Sell to open VTI September 18, 2023, 225 call for roughly $2.40 or more (adjust accordingly, prices may vary from time of alert)
Premium received: 4.4%
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 $55.05 (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.
An alternative way to approach a poor man’s covered call, if you are a bit more bullish on the stock, is to buy two LEAPS for every call sold. This way you can benefit from the additional upside past your chosen short strike, yet still participate in the benefits of selling premium.
Invesco DB Commodity Index ETF (DBC)
DBC is currently trading for 24.50.
We currently own the DBC January 17, 2025, 21 call LEAPS contract at $4.80. You must own LEAPS in order to use this strategy.
If you are new to the position, based on our approach, the LEAPS contract that works best is the one with a current delta of 0.80: the January 17, 2025, 22 calls.
We typically initiate a LEAPS position, with a delta of roughly 0.80, that has roughly 18 to 24 months left until expiration.
Also, 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.
Here is the trade (you must own LEAPS in DBC before placing the trade, otherwise you will be naked short calls):
Once you have LEAPS in your possession:
Buy to close DBC August 18, 2023, 24 call for roughly $0.55 or more (adjust accordingly, prices may vary from time of alert)
Once that occurs (or if you are new to the position):
Sell to open DBC October 20, 2023, 25 call for roughly $0.50 or more (adjust accordingly, prices may vary from time of alert)
Premium received: 10.4%
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 $4.80 (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 DBC.
Yale Endowment Portfolio Alert (VNQ)
The Yale Endowment portfolio continues to shine outperforming our benchmarks with portfolio gains currently reaching close to 20% since we initiated the portfolio back in mid-June of last year.
Vanguard Real Estate ETF (VNQ)
VNQ is currently trading for 83.22.
In the Yale Endowment portfolio, we currently own the VNQ January 17, 2025, 65 call LEAPS contract at $20.70. You must own LEAPS in order to use this strategy.
*If you are new to the position, based on our approach, the LEAPS contract that works best is the one with a current delta of roughly 0.80: the January 17, 2025, 65 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 (you must own LEAPS in VNQ before placing the trade, otherwise you will be naked short calls):
Once you have LEAPS in your possession:
Buy to close VNQ August 18, 2023, 88 call for roughly $0.05 or more (adjust accordingly, prices may vary from time of alert)
Once that occurs:
Sell to open VNQ September 15, 2023, 85 call for roughly $1.10 or more (adjust accordingly, prices may vary from time of alert)
Premium received: 5.4%
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 $20.70 (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 VNQ.
If you have any questions please feel free to email me at andy@cabotwealth.com.