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Fundamentals
Realistic Strategies, Realistic Returns

December 13, 2023

We have a few more December 15, 2023 positions to roll into the January/February expiration cycle. I will most likely get out of those (DBC, VNQ, TTE, etc.) later this afternoon. Stay tuned!

Cabot Options Institute Fundamentals Alert (GLD, VNQ)

We have a few more December 15, 2023 positions to roll into the January/February expiration cycle. I will most likely get out of those (DBC, VNQ, TTE, etc.) later this afternoon. Stay tuned!

All-Weather Portfolio (GLD)

SPDR Gold Shares ETF (GLD)

GLD is currently trading for 183.58.

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 roughly 0.80: the January 16, 2026, 174 calls.

COI_F_121323_GLD_LEAPS.png

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 December 15, 2023, 188 call for roughly $0.07. (Adjust accordingly, prices may vary from time of alert.)

COI_F_121323_GLD_close.png

Once that occurs (or if you are new to the position):

Sell to open GLD January 19, 2024, 188 call for roughly $1.51. (Adjust accordingly, prices may vary from time of alert.)

COI_F_121323_GLD_open.png

Premium received: 4.7%

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.

As always, if you have any questions, please do not hesitate to email at andy@cabotwealth.com.

Yale Endowment Portfolio (VNQ)

Vanguard Real Estate ETF (VNQ)

VNQ is currently trading for 85.74.

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 16, 2026, 70 calls.

COI_F_121323_VNQ_LEAPS.png

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 December 15, 2023, 82 call for roughly $3.85 or more. (Adjust accordingly, prices may vary from time of alert.)

COI_F_121323_VNQ_close.png

Once that occurs:

Sell to open VNQ January 19, 2024, 89 call for roughly $0.50 or more. (Adjust accordingly, prices may vary from time of alert.)

COI_F_121323_VNQ_open.png

Premium received: 2.4%

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.

As always, if you have any questions, please feel free to email me at andy@cabotwealth.com.


Andy Crowder is a professional options trader, researcher and Chief Analyst of Cabot Options Institute. Formerly with Oppenheimer & Co. in New York, Andy has leveraged his investment experience to develop his statistically based options trading strategy which applies probability theory to option valuations in order to execute risk-controlled trades. This proprietary strategy has been refined through two decades of research and real-world experience and has been featured in the Wall Street Journal, Seeking Alpha, and numerous other financial publications. Andy has helped thousands of option traders learn and implement his meticulous rules-driven options trading strategies through highly attended conferences, one-on-one coaching, webinars, and his work as a financial columnist. He currently resides in Bolton Valley, Vermont and when he’s not trading, teaching and writing about options, he enjoys spending time with his wife and two daughters, backcountry skiing, biking, running and enjoying all things outdoors.