The bad….

Last week I sent out an email saying starting this weekend I was moving my live trade to this platform. In it I said that I was going to share the good, the bad and the ugly of this single SPY trade for the next 6 months.

Lets recap. On Thursday July 8, 2021 I bought 1 single SPY Long Call for November of 2021. Meaning I had 6 months should I decide to hold it through that period. The options strike I bought at was the 426….. With options you don’t have to buy what ever price a stock is currently trading at but the price you want and then pay accordingly. I also said I would share the trades gains along the way, and would take the trade off should the SPY go south. Options may accelerate rapidly with gains but they can also go against you fast if the trade goes south. So share the trades progress in other words and also to illustrate a few basic differences between stocks and options. Also to share how adding options into ones investment portfolio can not only save you tons of cash over using just stocks but leverage your gains dramatically.

When I look at a stock chart for investing I like to look at the days closing price rather than the days intraday highs and lows. So if we took July 8ths closing price of $430.75 to Fridays closing price of $431.34 we would see that the SPY gained a whopping 0.11% in those 7 trading days!!! Wowww…. ( inserts faceplant )

Our option however is now In The Money by almost 3%. Which is kind of heartbreaking actually since we were up over 22% on Wednesday July 14th with a high of $437.92 ( we’ll get over it )

If we had bought the same amount of SPY shares with the same amount of money we spent on our SPY call that day we would only be up $9.00 that’s a happy meal I think.. In comparison to our $58.00 with our Call. Starting to see the advantage? There are many others besides the leverage, the Stocks are about possibilities, Options are about Mathematical Probabilities. There is a difference.

The SPY overall is in a long term uptrend, there is no denying that. I’m probably not the first one you’ve heard this from lately but right now the strategy of “Buy The Dip” is just not working, not right now at least. Earnings seasons kicks into full swing this week with some big names reporting.

Invest wisely, live charitably and be well

Brother Bill

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