Yale Endowment Portfolio (VNQ, EEM)
Our pseudo-passive Yale Endowment portfolio is now up 26.7% since inception.
Theta (time decay) remains a non-factor in our 2025 LEAPS positions. That being said, for those that have a 2025 LEAPS position, I plan to close our 2025 LEAPS and establish a new LEAPS position going out to 2026 at April expiration in 43 days. Additionally, I’ll be buying back our March calls in all of our portfolios over the next few days, most likely carrying into early next week.
Also, for those interested, I’ll be adding a few brand new positions across both of our active portfolios, and potentially a one-off trade in bitcoin using a poor man’s covered call approach.
If you have any question, please do not hesitate to email me at andy@cabotwealth.com.
Vanguard Real Estate ETF (VNQ)
VNQ is currently trading for 86.62.
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 March 15, 2024, 85 call for roughly $2.20 (Adjust accordingly, prices may vary from time of alert.)
Once that occurs:
Sell to open VNQ April 19, 2024, 89 call for roughly $1.15. (Adjust accordingly, prices may vary from time of alert.)
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 $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 EAFE ETF (EFA)
EFA is currently trading for 79.41.
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, 67 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 March 15, 2024, 76 call for roughly $3.80. (Adjust accordingly, prices may vary from time of alert.)
Once that occurs:
Sell to open EFA April 19, 2024, 81 call for roughly $0.84 or more. (Adjust accordingly, prices may vary from time of alert.)
Premium received: 5.6%
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 $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.
Dogs of the Dow Portfolio (IBM)
Our Dogs of the Dow portfolio is starting to make some traction and IBM is one of the stocks leading the way. The stock is up 22.8% in 2024, while our position, using a poor man’s covered call approach is up 41.7%.
International Business Machines (IBM)
IBM is currently trading for 196.65.
We currently own the IBM January 16, 2026, 125 call LEAPS contract at $40.30. 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, 155 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 IBM before placing the trade, otherwise you will be naked short calls):
Buy to close the IBM March 22, 2024, 190 call for roughly $8.40. (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 the IBM April 19, 2024, 200 call for roughly $5.15. (Adjust accordingly, prices may vary from time of alert.)
Premium received: 12.8%
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 $40.30 (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 IBM.
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