Quick Take: 21st Century Covered Call Strategy

Time Frame: One to Eight Weeks.

Stock: Bullish Market Edge Opinion – Long Stock position.

Desired Stock Price Direction: Sideways to Up.

Option Position: Short ATM Call – Long ATM +2 Call (Credit Spread).

Maximum Risk: The stock goes down and you lose the amount of the stock’s decline. However, the loss is offset somewhat by the amount of the credit spread.

Summary: If the stock stays flat or moves down, the credit spread will expire worthless and you will keep the credit. If the stock moves up, the stock and the long call will appreciate in line with the stock price.

Current 21st Century Covered Call Positions

On 07/17/2020, The underlying indicators are beginning to slip into neutral position. If momentum continues to weaken, further weakness may develop in the stock. The stock is underperforming the market when compared to the S&P 500 over the last 50 trading days. Though the technical condition of JPM is deteriorating, MACD-LT, an intermediate-term trend indicator, remains bullish at this time. If the stock closes below $95.64 a change in trend will be confirmed. Upside momentum, as measured by the 9-day RSI, is positive but beginning to weaken. Over the last 50 trading sessions, there has been more volume on down days than on up days indicating that JPM is under distribution, which is a bearish condition. The stock is trading above a rising 50-day moving average. If JPM falls below this important support level it could trigger additional selling pressure. In addition, JPM is below its declining 200-day moving average.

The Market Edge – Market Posture: Bullish
Current Stock Price Is Monday Morning
Initial Current Short Call Long Call
Stock # Of Stock 07/24/20 07/24/20 Credit Best Week % Approx Approx
Stock Price Weeks Price Strike Strike Spread Bet Return Div Date Div
MAR $93.76 8 $88.11 88.5 90.0 $0.61 5.2 0.7% N/A
PG $117.56 7 $125.57 126.0 128.0 $0.50 5.0 0.4% 07/23/20 $0.79
JPM $97.77 1 $97.77 97.5 99.0 $0.67 5.2 0.7%
0.0 0.0%
0.0 0.0%
0.0 0.0%
0.0 0.0%
0.0 0.0%
0.0 0.0%
0.0 0.0%
Stocks Have Strongest Market Edge Opinions. Weekly % Return: The Higher The Better. Besty Bet: The Bigger The Better.
Closed Positions
# Of Close
Stock Weeks Price $ P/L % P/L Reason
NONE

The information contained herein has been carefully compiled from sources believed to be reliable, but its accuracy is not guaranteed.  Past performance is not necessarily indicative of future results. Traders should read The Option Disclosure Statement before trading options. No representation is made that any account is likely to achieve profits or losses similar to those shown. Due to the possibility of human and/or mechanical error by The Optionomics Group LLC, Inc., its sources or others does not guarantee the accuracy, completion or availability of any information contained herein and is not responsible for any errors or omissions or for results obtained from the use of such information.