Very Hard To Lose With This Kind Of Trade

Jack Carter | May 7, 2024

Today I want to get down to business and give you one of the simplest, most basic options trades in the world.

The key to a covered call is picking the right underlying stock, and I’m going to give you that.

The ticker is VRT.

Right now it’s trading for about $97.

If you buy 100 shares of this stock, you’ll pay $97 x 100 shares = $9700.

If you use margin, you’ll only need half of that.

The Covered Call

Once you get that 100 shares, you can sell 1x VRT June 14 $100 Call for about $5.

That means you’ll collect about $500 for selling that one option.

So let’s do some math, if the stock costs you $97 per share and you collect $5, that means your cost basis is $92.

If the stock does happen to sink down near your cost basis, you can buy back the call option you sold at a cheaper price than you sold it and sell the stock. That’s your breakeven scenario.

Now, if the stock doesn’t go down and you get called out at $100, then you made the $500 plus the difference between $100 and the price you paid for the stock.

That’s why this is one of the best options trades in the world. It’s very hard to lose money with it.

In fact, the CBOE wrote a letter to the SEC that the covered call strategy is safer than owning a stock outright.

Why? Because it lowers your cost basis — and therefore it reduces your risk.

Take that one to the bank. And remember, if you’re still getting started with trading, you can paper trade this and still get all the experience of placing the trade without risking any money.

Trade well,

Jack Carter

Trending Stocks of the Week — May 7, 2024

Jack Carter | May 7, 2024

Quick note: If you haven’t seen the strategy I’m using to target $500 week after week — in all types of markets — you need to check it out right here.

Now back to our top stocks for the week:

To help you discover the power of trends, every week, every week, I share with you a handful of the top trending stocks.

These stocks are picked by the custom-built TrendPoint software I designed to pick the strongest trending stocks in the market right now.

If you know anything about me, you know that every trade I get into starts with a trending stock.

Unless a stock is in a strong trend, I don’t want to hear about it. In my book, wishy washy stocks are the quickest way to losing money.

This Week’s Stocks

My rule of thumb is: always trade in the same direction as the broad market…

But April threw the market a curveball and we don’t have a defined trend right now.

Still, no matter what kind of market you find yourself, in some individual stocks are in such strong trends that they can’t be stopped — and don’t need the broad market to cooperate.

Pull up this week’s stocks on a chart and look at how despite April’s market volatility, they have barely even paused their trend. These are perfect examples of strong stocks in a weak market.

Here are this week’s stocks — bullish on all three:

  • DAL
  • FTAI
  • GGAL

And don’t forget about last week’s picks, which you can find here.

This week’s stocks show a strong trend and could still be in play for the next few weeks.

What can you do with these stocks?

Well, there are a couple of things you could consider — after doing your own research, of course:

  1. You could just buy the stock. This is probably the simplest thing you could do. Then just wait for it to go up and sell when you hit a profit target you’re comfortable with. This is only for stocks we’re long on. For stocks we’re short on, you can short them.
  2. You could buy an option. You know I’m not a fan of speculative plays, but every once in a while it doesn’t hurt to throw a little cash at a speculative option. Of course, while options can move bigtime if the stock goes up… the downside of options is that you have a time limit on how quickly you need the stock to make that move. So think about your risk tolerance and consider buying calls or puts depending on the stock recommendations above.
  3. You could do an income play. If you’ve been following me for any length of time, you know that I’m a big fan of income plays, because they increase your odds of winning. We do this by SELLING options instead of buying them. If you haven’t tried your hand at income trading yet, I urge you to try this exercise for yourself.

    Without risking any money, it will really let you see the power of income trading and why it’s my favorite method.

    Whether you end up doing naked puts, covered calls or some kind of spread, this is really my preferred method to use when I’ve found a great trending stock like the ones on this week’s list.

That’s it for now.

Stay tuned, because I’ll be sending you a new list of TrendPoint Best Trending Stocks every week! (usually Mondays)

Trade well,

Jack Carter