The 21st Century Covered Call Strategy For The Week Of – 08-05-19

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 selection this week: BIDU

On 08/01/2019, 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 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 $117.26 is a number to watch to confirm a trend reversal. The stock is in a short-term oversold condition based on a Slow % K stochastic reading of 20 or lower. Over the last 50 trading sessions, there has been more volume on up days than on down days indicating that BIDU is under accumulation, which is a bullish condition. The stock is trading below a falling 50-day moving average. A close above this moving average would be supportive of the improving conditions.

Current  Open Positions 

Results for this week’s trades will be posted over the weekend on the Scoreboard.