Today the S&P 500 hit a high. Will it hold? And what does it mean for your investments and options?
The market is trading above a major technical level… 2,115 on the S&P 500.
If this holds, or better still, if it can close above the previous high of 2,131.71 for a few days, we could be off to the races.
How do you trade this?
First, sell this week’s next call on every stock you own—this run up could be a head fake.
Take the cash the market is giving you. Right now.
If you get called out, simply buy the shares back.
If you’re afraid of missing out on profits, well… get with the program. Trading is about cash and gains on top of capital preservation.
Selling a call generates cash and reduces your cost bases, so you’re generating cash and profit and practicing a weekly form of capital preservation with the same trading tactic.
Looking for something good? How about a bank?
In my services, I jumped on the banks once the silly Brexit sell-off was over. That took long, right?
And guess what? The banks are still moving.
Whatever you do, keep it simple. Trade the best bank in the world, by a country (or sophisticated-city) mile: Goldman Sachs (NYSE:GS).
If you buy the shares now—somewhere north of $151 per share—you’ll get between $2.50 and $3.00 selling this week’s $150 call.
Let’s assume you get $2.75. And let’s assume you paid $151.25 for the shares. Then imagine you get called out…
You net $1.50 per share in a week. Do that fifty times year—take off two weeks to enjoy a now cheap trip to London, like I’m planning—and you net $75 per year on a $150 investment.
That’s a 50% annualized return. Just think about it.