Please ensure Javascript is enabled for purposes of website accessibility
Fundamentals
Realistic Strategies, Realistic Returns

February 15, 2023

Intel (INTC)

We currently own the INTC January 17, 2025, 17.5 call LEAPS contract at $11.40. 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 0.82: the January 17, 2025, 17.5 calls. We typically initiate a LEAPS position, with a delta of roughly 0.80, that has about 18 to 24 months left until expiration.

Here is the trade:

Buy to close the INTC February 17, 2023, 30 call for roughly $0.03 (adjust accordingly, prices may vary from time of alert)

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

Sell to open INTC March 31, 2023, 30 call for roughly $0.77 (adjust accordingly, prices may vary from time of alert)

Premium received: 6.8%

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 $11.40 (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 INTC.

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

Cabot Options Institute Fundamentals – Alert (EEM, EFA)

It’s expiration week and we need to roll a few of our positions. Expect to see several trade alerts over the next few days as we buy back our short calls and immediately sell more short calls (collecting premium) for the March expiration cycle.

YALE ENDOWMENT PORTFOLIO

iShares Emerging Market ETF (EEM)

We currently own the EEM January 19, 2024, 30 call LEAPS contract at $11.50. 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 contracts with a delta of 0.80 are currently the January 17, 2025, 30 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 EEM February 17, 2023, 42 call for roughly $0.02 (adjust accordingly, prices may vary from time of alert)

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

Sell to open EEM March 17, 2023, 41 call for roughly $0.40 (adjust accordingly, prices may vary from time of alert)

Premium received: 3.5%

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 $11.50 (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 EEM.

iShares EAFE ETF (EFA)

We currently own the EFA January 19, 2024, 45 call LEAPS contract at $19.50. You must own LEAPS in order to use this strategy.

The LEAPS contracts with a delta of 0.79 are currently the January 17, 2025, 62 calls. We typically initiate a LEAPS position, with a delta of roughly 0.80, that has about 18 to 24 months left until expiration.

Here is the trade:

Buy to close EFA February 17, 2023, 72 call for roughly $0.03 (adjust accordingly, prices may vary from time of alert).

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

Sell to open EFA March 17, 2023, 72 call for roughly $0.74 (adjust accordingly, prices may vary from time of alert).

Premium received: 3.8%

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 $19.50 (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 EFA.