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.
This Week’s 21st Century Covered Call Selections
There is one new selections this week: WMT
On 05/30/2019, The technical condition of WMT is deteriorating. Overall momentum is slowing and if support levels are violated, further weakness in the stock is probable. The stock has outperformed the market over the last 50 trading days when compared to the S&P 500. The MACD-LT is indicating that the intermediate-term trend is bearish at this time. If the stock closes below $99.16 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 up days than on down days indicating that WMT is under accumulation. The stock is trading above a rising 50-day moving average. If WMT falls below this important support level it could trigger additional selling pressure. WMT could find secondary support at its rising 200-day moving average.
Current Open Positions
| The Market Edge – Market Posture: | Bullish | ||||||||
| Short Call | Long Call | ||||||||
| # Of | Stock | 06/07/19 | 06/07/19 | Credit | Best | Week % | Approx. | Approx. | |
| Stock | Weeks | Price | Strike | Strike | Spread | Bet | Return | Div Date | Dividend |
| SBUX | 7 | $75.83 | 75.0 | 77.0 | $1.05 | 4.0 | 1.4% | N/A | $0.00 |
| RCL | 6 | $121.63 | 121.0 | 123.0 | $0.89 | 6.0 | 0.7% | 06/03/19 | $0.70 |
| WMT | 1 | $101.62 | 102.0 | 104.0 | $0.67 | 2.0 | 0.7% | N/A | $0.00 |
| Prices Are Friday’s 3:00 Prices | |||||||||
| Stocks Have Strongest Market Edge Opinions | |||||||||
| Weekly % Return: The Higher The Better | |||||||||
| Best Bet: The Bigger The Better | |||||||||
Results for this week’s trades will be posted over the weekend on the Scoreboard.