How about a cool idea for today’s crazy market?
As I’ve said many times before, giving you great ideas is what sets us apart, so if you’re patient and take some notes, I think you’ll like this one. It’s called a jade lizard hybrid, and that alone should keep you focused on staying with us for a little while. Hi, this is Dave Dooley from the Georgia Advisor Group here in Alpharetta, Georgia. With over 40 years in the financial markets and some of the brightest minds when it comes to taking advantage of solid strategies in today’s market, we try to provide timely financial tips to help our followers be more aware and knowledgeable in today’s complex and ever-changing economic times. For the year 2022, the Dow Jones is down around 21, the SP 500 is down 25%, and the NASDAQ is down over 33, and that’s just year-to-date, not their highs from late 2021.
Those numbers are enough to force a lot of people to run and hide, but we continue to look for ways to not only survive but to thrive. Normally, our videos are more informative than strategic, but today we wanted to throw out a quick idea that might be relevant in today’s market. One can make a case for high inflation and high interest rates continuing to put pressure on the markets; one can also make a case for certain profitable companies that have had a decent drop and are ready to go up soon; and finally, one can make a case for a little sideways action for the foreseeable future, at least until the interest rate and inflation situation starts to improve. Determine how many shares you would like to potentially own; it should be at least 200 shares. Now, our first transaction is to purchase 100 shares, and the current price of Apple is 139 dollars, so we invest 13,900 dollars.
Our next trade is to sell one June 2023 150 call option for twelve dollars per share, giving you a total of twelve hundred dollars to keep this trade, which means you’re agreeing to sell your hundred shares for 150 dollars per share if it rises to 150 or higher.The final trade is to sell one June 2023 130 put option for ten dollars per share, which generates another thousand dollars for you to keep this trade, which means you’re agreeing to buy a hundred more shares for 130 dollars per share if it falls to 130 or lower.Now what does all this really mean? It means that by selling the options, you earn a total of $22,100. This is 15.8 percent of the value of the stock. If the stock rises above 150 by next June and you are forced to sell it for 150, you add 11 cents per share, or a thousand more profits, to your 2200 or 3300 and a 23 percent total return.
This is your best and maximum profit, no matter how high Apple should rise in the future, but that return is yours with a minimum amount of movement. This is a very good return in approximately eight months with not much movement required. Now what is our risk? We said at the beginning that we wouldn’t mind owning 200 shares, and so far we’ve only bought 100. If the stock drops below 130, we will have to buy another 100 at 130. Even if it falls below that, how does that affect selling the options up front? We received 2200 that is ours to keep. If we were required to buy a hundred more shares at 130, we would be investing another thirteen thousand dollars or a total of twenty-six thousand nine hundred for the 200 shares that we have now bought as we should receive 2200, reducing our total expenditure to 24450 or a cost basis or break-even price of 123.25, which is 16.75 below today’s market price.
We would not have losses unless it dropped below 123.25, so our potential outcomes are under 130. Our breakeven point is 123.25 between 140 and 150. Our gain is 15.8 percent and above 150. Hour return is around 23%, not bad for 8 months, so a great idea with companies that are fundamentally strong with great management in place and most importantly, stay with a reasonable state and trade within a reasonable range now, don’t get frustrated as you stop this video or as you look at it because you can stop it and start it and go back and review what I’ve just talked about as always, I’m going to tell you to use experts in these areas. Most firms don’t have the time or resources to provide this type of service, but with a boutique firm like ours, this is what actively matters and what the counts look like now. I hope this gets you thinking a little bit, and if you think our content is good, I want you to click subscribe below, click on the “show more” button also, and that way you’ll be able to visit us at our website, take a look around, and be able to fill out the information there to join our newsletter until next time.
