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 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
| The Market Edge – Market Posture: | Bullish | |||||||||
| Stock Price Is Friday Afternoon | ||||||||||
| Initial | Current | Short Call | Long Call | |||||||
| Stock | # Of | Stock | 08/09/19 | 08/09/19 | Credit | Best | Week % | Approx. | Approx. | |
| Stock | Price | Weeks | Price | Strike | Strike | Spread | Bet | Return | Div Date | Dividend |
| BIDU | $107.55 | 1 | $107.55 | 108.0 | 110.0 | $0.81 | 4.8 | 0.8% | N/A | $0.00 |
| 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% | |||||||||
| 0.0 | 0.0% | |||||||||
| 0.0 | 0.0% | |||||||||
| 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.