All-Weather Portfolio Alert (VTI, TLT, GLD, IEF)
We have a few more January 19, 2024, positions to roll into the February/March expiration cycles. I’ve decided to hold off on selling our LEAPS during this expiration cycle. I plan on selling our 2025 LEAPS in the passive portfolios (All-Weather, Yale Endowment) and buying new 2026 LEAPS during the February expiration cycle, if not before.
For those who are new and wish to enter a trade, all of the details are listed in the alerts (as always) for those wanting to initiate a position. As always, if you have any questions, please do not hesitate to email me at andy@cabotwealth.com.
I will be sending out an additional alert for all of the Yale Endowment trades shortly, most likely around 1:30 ET. Stay tuned!
Vanguard Total Stock Market ETF (VTI)
VTI is currently trading for 237.55.
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 and wish to initiate a position, based on our approach, the LEAPS contract that works best is the one with a current delta of 0.80: the January 16, 2026, 210 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 January 19, 2024, 240 call for roughly $0.03. (Adjust accordingly, prices may vary from time of alert.)
Once that occurs:
Sell to open VTI February 16, 2024, 240 call for roughly $2.40. (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.
iShares 20+ Year Treasury Bond ETF (TLT)
TLT is currently trading for 93.78.
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 16, 2026, 76 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 January 19, 2024, 101 call for roughly $0.01. (Adjust accordingly, prices may vary from time of alert.)
Once that occurs (or if you are new to the position):
Sell to open TLT February 16, 2024, 96 call for roughly $0.75. (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 $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.
The All-Weather Portfolio continues to shine in all market environments. The strategy might not offer historic upside, but it also doesn’t expose investors to huge downside risk. It’s simply a consistent performer through thick or thin. The goal is obviously to make a nice return but with a smooth equity curve.
SPDR Gold Shares ETF (GLD)
GLD is currently trading for 187.79.
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, 177 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 January 19, 2024, 188 call for roughly $0.11. (Adjust accordingly, prices may vary from time of alert.)
Once that occurs (or if you are new to the position):
Sell to open GLD February 16, 2024, 192 call for roughly $1.10. (Adjust accordingly, prices may vary from time of alert.)
Premium received: 3.4%
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 $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.
iShares Trust 7-10 Year Treasury Bond ETF (IEF)
IEF is currently trading for 94.77.
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 16, 2026, 86 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 January 19, 2024, 96 call for roughly $0.05. (Adjust accordingly, prices may vary from time of alert.)
Once that occurs (or if you are new to the position):
Sell to open IEF February 16, 2024, 96 call for roughly $0.38. (Adjust accordingly, prices may vary from time of alert.)
Premium received: 2.3%
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.
As always, if you have any questions, please do not hesitate to email at andy@cabotwealth.com.
Yale Endowment Portfolio (VNQ, EEM, EFA, TIP, SPY)
Vanguard Real Estate ETF (VNQ)
VNQ is currently trading for 84.82.
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, and wish to initiate a 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, 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 January 19, 2024, 89 call for roughly $0.03. (Adjust accordingly, prices may vary from time of alert.)
Once that occurs:
Sell to open VNQ February 16, 2024, 87 call for roughly $0.95. (Adjust accordingly, prices may vary from time of alert.)
Premium received: 4.6%
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.
iShares MSCI Emerging Market ETF (EEM)
EEM is currently trading for 38.31.
In the Yale Endowment portfolio, we currently own the EEM January 17, 2025, 29 call LEAPS contract at $12.15. 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, 29 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 EEM before placing the trade, otherwise you will be naked short calls):
Once you have LEAPS in your possession:
Buy to close EEM January 19, 2024, 40.5 call for roughly $0.01 or more (adjust accordingly, prices may vary from time of alert)
Once that occurs:
Sell to open EEM February 16, 2024, 39 call for roughly $0.44 or more (adjust accordingly, prices may vary from time of alert)
Premium received: 3.6%
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 $12.15 (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 MSCI EAFE ETF (EFA)
EFA is currently trading for 73.68.
In the Yale Endowment portfolio, we currently own the EFA January 17, 2025, 63 call LEAPS contract at $14.90. 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, 62 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 EFA before placing the trade, otherwise you will be naked short calls):
Once you have LEAPS in your possession:
Buy to close EFA January 19, 2024, 74 call for roughly $0.04 or more (adjust accordingly, prices may vary from time of alert)
Once that occurs:
Sell to open EFA February 16, 2024, 75 call for roughly $0.58 or more (adjust accordingly, prices may vary from time of alert)
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 $14.90 (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.
iShares Trust TIPS ETF (TIP)
TIP is currently trading for 106.92.
In the Yale Endowment portfolio, we currently own the TIP January 17, 2025, 95 call LEAPS contract at $16.50. 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 16, 2026, 101 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 TIP before placing the trade, otherwise you will be naked short calls):
Once you have LEAPS in your possession:
Buy to close TIP January 19, 2024 107 call for roughly $0.07. (Adjust accordingly, prices may vary from time of alert.)
Once that occurs:
Sell to open TIP February 16, 2024, 108 call for roughly $0.48 or more. (Adjust accordingly, prices may vary from time of alert.)
Premium received: 2.9%
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 $16.50 (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 TIP.
SPDR S&P 500 ETF (SPY)
SPY is currently trading for 480.30.
In the Yale Endowment portfolio, we currently own the SPY January 17, 2025, 345 call LEAPS contract at $98.00. 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 16, 2026, 425 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 SPY before placing the trade, otherwise you will be naked short calls):
Buy to close SPY January 19, 2024, 476 call for roughly $4.23. (Adjust accordingly, prices may vary from time of alert.)
Sell to open SPY February 16, 2024, 490 call for roughly $2.67. (Adjust accordingly, prices may vary from time of alert.)
Premium received: 2.7%
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 $98.00 (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 SPY.
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.
As always, if you have any questions, please feel free to email me at andy@cabotwealth.com.