21st Century Covered Call For The Week Of -12-09-19

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.

This Week’s 21st Century Covered Call Selections

There is one new selections this week: SBUX

On 12/06/2019, There have been positive signs in some of the indicators suggesting that the stock has bottomed. Look for improvement in trend following indicators such as MACD-ST or short term moving averages for confirmation that a new uptrend is beginning. A break above resistance numbers would also confirm that higher prices are in the near term outlook. The stock is underperforming the market over the last 50 trading days when compared to the S&P 500. The MACD-LT, an intermediate-term trend indicator, is bullish at this time. A close above $85.44 is a number to watch to confirm a trend reversal. Momentum as measured by the 9-day RSI is gaining in strength. Over the last 50 trading sessions, there has been more volume on up days than on down days indicating that SBUX is under accumulation, which is a bullish condition. The stock is above its 50-day moving average which is pointed down. This is supportive that the trend is improving. SBUX is above its rising 200-day moving average which is pointed up adding to the stocks improving technical condition.