CPT Covered Call Newsletter - Feb / Mar 2020

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The always free CPT 'Covered Call' Newsletter - just trying to UP your Game! Share! via your social/email
Welcome to this month's CPT Newsletter!
WELCOME BACK EVERYONE! to the CPT Newsletter on Writing Covered Calls and Selling Cash Secured Puts. In this Newsletter I will share with you my experiences, trades and other good stuff that should 'Up Your Game!' First and foremost I want to wish hope and health for everyone ... these are trying times in the markets for sure ... but these are MORE trying times IN LIFE. I encourage everyone to take care of yourself. Be with family, be Cup Half Full as much as possible ... trust me, this whole thing as gotten me worked up and very protective ... we have an unprecedented perfect storm happening with virus fears, economy fears, stock market fears, bankruptcy fears and just overall global uncertainty ... I'm not a doctor, financial expert ... I'm just gonna play one here ... take care of yourself physically and emotionally ... and with the markets, make good decisions ... talk to someone ... seek advice ... what we don't want to do is make bad decisions that we'll live with long after this shakes out ... Good luck and trust me I'm pullin for you! I too am worried ... trying to keep it 'Cup Half Full'
Since last newsletter where we talked about the stock markets hitting ALL TIME HIGH's and the Dow poised to cross 30,000 its been nothing but down hill as the the fears of the COVID-19 virus, oil price war and general over all global fear brought such uncertainty Wall Street did exactly what it does ... SELL SELL SELL. Although never surprising, it was a bit worrisome as the markets tanked on what can be best described - fear. When the NBA shut down its season it was the domino drop that seemed to cause most all major sports to shut down events. Schools then followed suit by closing ... the FEAR of a global virus and the media coverage around it has everyone going insane ... which is warranted but seems extreme. With no one really knowing the total damage this virus can cause both with people getting sick and the economy, Wall Street left no doubts ... uncertainty means sell. This hasn't left many opportunities for Covered Call Writers ... with stocks falling, many have cost basis's well under the strike prices they would write and with the volatile Ups and Downs ... the shares would be at risk of being taken at a loss... buying back these options might not be doable as some stocks are moving in -15 pt swings ... so the Cash Secured Put offers selling premium players an opportunity to continue to generate income during these times of severe market sell offs. Some have suggested using INVERSE ETF's (Youtube inverse ETF's if you're not familiar) ... I have not tried these rather instead opt'ing for CSP's during this time, using leveraged ETF's for the higher premium's trying to play the directional swings in the market. This month's newsletter focus's on the Cash Secured Put and how I use them to generate steady gains in both Up and Down stock markets.
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https://cptcoveredcallnewsletter.blogspot.com/2020/03/cpt-covered-call-newsletter-febmar-2020.html
Let's break down the Newsletter because it looks like a TON of blah blah
1) SHOW ME THE MONEY! No other guru's I give you an up to date yearly trading totals!
2) CHART OF THE MONTH! See the World Thru My Eyes - Goldman Sachs (GS)
3) SELLING PREMIUM 'Topic of the Month' - The Cash Secured Put
4) The SPECIAL OFFER is Back - The Upgraded CPT Dashboard FREE MONTH!
4) Exclusive Newsletter podcast - Cash Secured Put discussion and trades.
5) ALL Social ALL the TIME! Youtube / Facebook - join our 'like minded community today!'
"SHOW ME THE MONEY!"
As of this Newsletter post date, 2020 CURRENT TOTALS! (Goal is $55,000)
$17,102.08			7.60%
2019 was an awesome year even though I did not achieve my $50,000 goal. ($49,436.70) 2020 started out ON FIRE with at one point me being UP over $16,000 in just 2 full months. I had some late 2019 options expire in 2020 adding to this year's totals and not last years. (we record profits when they close, never before because anything can happen) ... with a recent loss its reduced my current totals as of this newsletter to $15,211... UP 6.76% where as the S&P 500 is DOWN (at this point) -16.2% this year.
NEWSLETTER STOCK CHART BREAKDOWN
DISCLAIMER: This chart is based on this date. I'm not suggesting a move up or down. I'm showing a chart I'm watching. I'm not recommending this stock as a purchase. Think of it like this, your showing the world thru my eyes and how I see this chart. Chart's of the Week are posted for all the Upgraded CPT Dashboard subscribers. (this one was not)
- to fully understand the chart breakdown, read the setup first, then it'll become more clear as you read it -
THE SETUP: I love making LOW ENTRY stock purchases and have done many videos on the various charting 'indicators' I use when charting a stock. I like stocks that trade with an RSI under 50, trades near traditional SMA 100, 200 support lines, trading under the Keltner Channel MID line and I want to see an UP trending OBV line (see definitions for all of these below)
CHART OF THE MONTH
Goldman Sachs	GS		LAST TRADE >	$177.17
			POSTED ON	3/15/2020
See the World thru my eyes' - chart breakdown of the week
MARKETS ARE TRASHED ... so all the indicators for pretty much any stock are going to be in my wheelhouse to have a 'low-entry' purchase ... rather instead, let's focus on what we want when buying a stock or putting up the cash for a Cash Secured Put ... using Goldman Sachs (GS) ... I have to ask myself a couple questions ... 1) is it a great S&P 500 type company? In market sell offs I want to buy great companies cheaper. For me, this isn't the time to speculate ... Wall Street typically buys back the great companies first ... so if GS fits that mold, then I will investigate further. 2) Does GS have a support line that is visible at first glance ... and clearly GS has support. 3) Do they pay a dividend? GS pays a healthy $5 a year ... these questions are the Golden Rules of Covered Call Writing ... because IF were going to sell Cash Secured Puts on a stock, we have to want to own it because we could be assigned the shares ... so ALL THE RULES for writing covered calls apply for selling cash secured puts.
RSI	SMA (100)	SMA (200)	KELT MID	OBV TREND
38.13	225.62	211.87	198.56	HIGHER, SIDEWAYS
CLICK IMAGE TO SEE IT LARGER IN ITS OWN BROWSER WINDOW

What's the RSI telling me?
RSI - 20/30 represents a stock that is Over Sold and we need to have caution and understand why its being Over Sold. This is where I like picking up shares for a nice 'low entry' purchase
CPT - Where was Goldman Sachs trading before the sell off ... its RSI was in the 30/40 range ... a sideways trade
Support Lines
SMA - When looking for a 'Low Entry' purchase we would love to BUY near the 100 day or 200 day support line. It's not 100% but its a 'Buy Low' situation vs 'Buying High'
CPT - Prior to the sell off (notice the theme here?) GS was testing its 50 SMA with its 200 SMA some -10pts lower ... so although it was trading sideways ... it hadn't really been sold off yet to key 200 day support.
Keltner Channel Breakdown
KC - The stock is trading UNDER the KC MID line which presents more of a 'Low Entry' purchase and now is the time for me to start watching the stock. I like buying for value UNDER the MID line.
CPT - GS was trading near the BOTTOM band of the KC prior to the sell off suggesting a good low entry purchase was a possible play ... markets tanked, now the KC and most indicators, for now are not as important.
On Balance Volume or buying momentum ... is it trending Up?
OBV - The 'On Balance Volume' trend line is UP which tells technical traders that the stock has good momentum or in straight talk, people are BUYING IT. This is a 'Green' check mark for me.
CPT - Good news, even though prior to the market sell off, GS's OBV line was moving higher, suggesting traders still putting money into GS shares.
Further research with - Using charts for technical analysis, Dividend information and Earnings Report Date
RSI, SUPPORT LINES		KELTNER, OBV
View Chart-GS		View Chart-GS
Definition of the various charting indicators I use
RSI - The Relative Strength Index (RSI), developed by J. Welles Wilder, is a momentum oscillator that measures the speed and change of price movements. The RSI oscillates between zero and 100. Traditionally the RSI is considered overbought when above 70 and oversold when below 30. Source - https://www.investopedia.com/terms/r/rsi.asp
SMA (100/200) - A simple moving average (SMA) is an arithmetic moving average calculated by adding recent closing prices and then dividing that by the number of time periods in the calculation average. ... Short-term averages respond quickly to changes in the price of the underlying, while long-term averages are slow to react. Source - https://www.investopedia.com/terms/s/sma.asp
KC - The Keltner Channel is a moving average band indicator whose upper and lower bands adapt to changes in volatility by using the average true range. The Keltner Channel is used to signal possible price breakouts, show trend, and give overbought and oversold readings. Source - https://www.investopedia.com/terms/k/keltnerchannel.asp
OBV - On-balance volume (OBV) is a technical trading momentum indicator that uses volume flow to predict changes in stock price. ... He believed that when volume increases sharply without a significant change in the stock's price, the price will eventually jump upward or fall downward. Source - https://www.investopedia.com/terms/o/onbalancevolume.asp
Disclaimer - Yes - at the time of this posting I do have a position in this equity. By posting this I am by no means recommending this equity and am not front running for its performance. I have risked my own money and am accountable for the trade results.
SELLING PREMIUM 'TOPIC OF THE MONTH'
This month's Selling Premium Topic is all about The Cash Secured Put
CASH SECURED PUT BASICS - When selling a Cash Secured Put (CSP) you are telling the greater stock market that you will BUY someones shares at a price YOU pick (Strike) and will give the stock market a time frame (expiration) YOU pick and YOU get a per share premium for doing that. You're putting up the money and giving someone the RIGHT but not the OBLIGATION to assign you there shares ... think of it this way ... you're basically giving someone who owns shares in a stock ... INSURANCE ... THEY can not lose any more then X on a stock ... so to have the ability to ASSIGN someone there shares at X they will buy your CSP as INSURANCE ... they get X, you get the shares at the price you picked and the per share premium. Again, you are selling the RIGHT not the OBLIGATION for someone to ASSIGN YOU there shares ... which might not happen.
MY GOLDEN RULES OF CASH SECURED PUT SELLING - In my opinion, the Golden Rules for Put selling are as follows - 1) We must want to own the underlying security because should we be assigned the shares we must be willing or want to own / hold the shares. 2) I want the security to pay a dividend ... again, if I'm assigned, I want a dividend of at least 2% 3) No Earnings Report during the time frame to avoid volatility just like when we write covered calls 4) We have a plan and execute the plan ... are we selling this CSP to obtain shares lower. Are we trying to 'time the markets' and sell a CSP in the hopes were not assigned shares. 5) Having volume and Open Interest are important. 6) When I sell Cash Secured Puts I want 5% on my money ... ROI ... if I'm going to set aside my money I want rewarded ... so I like 5% or more ... they are BUYING my Put for insurance ... they can NOT lose more then the strike ... so I want paid for giving them that insurance.
From the CBOE - Who should consider Selling Cash Secured Puts? - An investor who would like to acquire shares in a particular security, but is willing to wait for them to trade at a target price that is below current market level - source link below
RIGHT VS. OBLIGATION - Remember that by Selling a Cash Secured Put you're giving someone the RIGHT but not the OBLIGATION to ASSIGN you or PUT you shares if and ONLY IF the share price is at or below the strike price you sell your CSP. If the shares trade HIGHER, the buyer of your CSP is under no obligation to give you there shares higher ... they can simply sell there shares on the open market for more money ... so no, you will not be assigned shares.
What's the TRUE RISK of selling a Cash Secured Put - my opinion is this, being assigned the shares. YES, being assigned the actual shares is the risk ... so if you sell a Cash Secured Put and you DO NOT want to own the shares ... you are at risk of being put shares of a company or security you don't want to own. Adhering to the Golden Rules for Covered Call Writing are important even for Puts because once you're assigned the shares you then OWN THE RISK just like you had purchased shares.
Click this link to start search The Cash Secured Put
REDUCING COST BASIS - many CSP sellers will say the real reason to sell Puts is to reduce the cost basis on the shares you are being assigned. Say a stock is trading at $100, you sell a CSP, strike $95 and get $5 in premium ... your true cost basis is $90 ... you are assigned shares at $95 and you received $5 for selling that right ... so in this example IF this companies shares FELL under $95 ... remember, anything ABOVE the strike you WILL NOT be assigned the shares ... your true cost basis is $90. See that?
SELLING CSP's for OPTION PROFITS - many people will use the CSP when a stock falls to its key support lines to take advantage of an UPSWING the shares might have should Wall Street BUY the stock (value) ... someone could sell a CSP, OTM or UNDER the current share price and hope the stock moves higher ... the CSP premium, because the stock is now UNLIKELY to trade under the strike price will shrink... allowing the person to BUY BACK this CSP THEY SOLD for cheaper, profiting the difference. They received X, the stock moves higher, the CSP is trading less X, they buy back the option, pocket the difference ... never taking ownership of the shares.
USING THE CASH SECURED PUT FOR HIGH PREMIUM PLAYS - in my most recent video I posted for my Youtube channel I use the Cash Secured Put for BOTH quick CSP option profits and large CSP premiums on a great S&P 500 type company like Goldman Sachs ... take the time and watch it as I explain how I use the DOWN MARKETS and TIME cashing in on a very volatile stock market.
I SHOW YOU trades +28% IN THIS MARKET! Selling Cash Secured Puts!
MY CASH SECURED PUT PODCASTS
I've posted up (3) great downloadable MP3 podcasts discussing the Cash Secured Put ... definitely something to check out if your in the car, on the road or you want some white noise in the background ... click the link below

FREE PODCASTS on the Cash Secured Put CLICK HERE
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CPT NEWSLETTER OLD SCHOOL VIDEO PLAYLISTS
This month's CPT Newsletter Exclusive video is a re-visit of my Old School Youtube Cash Secured Put playlist ... over 8 videos showing you trades I used profiting using the Cash Secured Put ... all of them are relevant and fun to watch. Pick one today and see if it Ups your game as it did for so many that watched them then. :)
>>>	Click here to watch this month's old school video			<<<
>>>	Click here to watch this month's old school video			<<<
Are you all caught up on the recent videos?
Look, I get it … some of my video's rehash common Covered Call and Cash Secured Put topics you may already feel you master … but my weekly videos are generally short and you know I always give you something extra … whether it be a story or a CCW/CSP tip … check it out … I've done 2 this past week … are you caught up?
	Click here to watch my most recent video upload
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Who is the Core Position Trading guy?
The first thing you need to know is … I'm not a guru and nor to I pretend to be … I haven't worked on Wall Street and nor do I feel anyone needs too for using this investment strategy I so advocate … I'm a guy just like you that started trading the stock market way back in the late 1990's (pre dot com boom) when eTrade became available for us 'home investors'. I traded all the tech stocks that you might remember … making series bank one year and losing just as much during the crash. Fast forward some 22 years I'm still trading in the stock market with my online brokerage … but the days of swing trading and day trading are over for me … rather instead I use the Covered Call and Cash Secured Put investment strategy for most ALL of my success these days.

"Why would I ever 'give away' my trade secrets if you're making that much money?"
So, the first thing you need to understand with this journey I started 3 years ago is that … I am paying forward a wonderful deed my mentor and best friend Jerry did for me. You can (and I encourage) hear our story on my web site cptdashboard.com click the video 'Meet Jerry' … seeing that I was frustrated and having no success swing trading, day trading he taught me how to sell premium (Write Covered Calls) … he worked with me for over 1 year, mentoring me, answering my questions … I was apprehensive in making a mistake … screwing up … he walked me thru my first trade and that began my new life of success investing and working the stock market. You really need to hear our story if you're skeptical of what I'm doing … only then you will understand our story is genuine … I have no agenda. I show you my trades, we talk about them in hopes you learn something. It really is that genuine and simple.
LINKS TIP for this newsletter …
Ok, I'm NOT a webpage guru so you have to work with me … Here's what happens if you just 'click on a link' … you're taken to that website (ie, Youtube) and you'll have to click the 'BACK' button to get back … frustrating … how about this … HOVER over the link and RIGHT CLICK … open new Tab or Window … then THIS window stays open as well as the new link opens :)
See you NEXT month and I hope you enjoyed my CPT Newsletter!
"Hey look until next time, I hope all YOUR Covered Calls be profitable"
Image credits - stockcharts.com | barchart.com | foolcdn.com | yahoo.com | earningswhispers.com | and me :)
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Read the fine print I think you understand by now that I'm not an investment adviser and can not give any specific investment advice. For those that are interested, I tell you my story and show you my trade in the "Hopes" that by seeing me you can take away a bit of information that will "up your game" … below is the CPT Newsletter disclaimer and link to my full disclaimer.