21st Century Covered Call For The Week Of 11-23-20

Quick Take: 21^st 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.

What Can Happen At Expiration And What Action Should I Take?

1. Stock Position: Stock price closes up or down.                                          Hold For 8 Weeks Unless Market Edge Opinion Is Downgraded.
2. Short Call: If In The Money (ITM).                                                              Close The Spread Or Let The Stock Get Called.
3. Short Call: If Out Of The Money (OTM).                                                     Let It Expire Worthless.
4. Long Call: If In The Money (ITM).                                                               Close The Spread.
5. Long Call: If Out Of The Money (OTM).                                                      Let It Expire Worthless.

Current 21st Century Covered Call Positions

New Positions: AMD & MAR

On 11/20/2020, Though the technical outlook remains somewhat mixed there are signs that point to an improved outlook for the stock. Several of the pertinent indicators have turned positive and the stock appears to be under accumulation. Should the stock break above recent resistance numbers it could mark the beginning of a new uptrend. The stock is outperforming the market when compared to the S&P 500 over the last 50 trading days. A close above $85.47 is a number to watch to confirm a trend reversal. Momentum as measured by the 9-day RSI is positive but showing signs of slowing. Over the last 50 trading sessions, there has been more volume on up days than on down days indicating that AMD is under accumulation, which is a bullish condition. The stock is trading above a rising 50-day moving average which confirms the improving technical condition. AMD is above its rising 200-day moving average which is pointed up adding to the stocks improving technical condition.

On 11/20/2020, The current technical condition for MAR is strong and the underlying indicators should keep the current uptrend intact. The stock has outperformed the market over the last 50 trading days when compared to the S&P 500. The MACD-LT is confirming that the intermediate-term trend is bullish. Chart formation indicates a strong rising trend. Upside momentum, as measured by the 9-day RSI indicator is positive but is beginning to slow. Over the last 50 trading sessions, there has been more volume on up days than on down days indicating that MAR is under accumulation, which is a bullish condition. The stock is trading above a rising 50-day moving average. This validates the strong technical condition for MAR. The stock is above its 200-day moving average but the 200-day is pointed down indicating that the intermediate-term trend is still in question.

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.