Rocky’s Weekly Stock Picks
The picks for this week were initially all going to be juicy picks for buying LEAPS and starting PMCC’s.
Then upon a cursory internet search, I noticed there’s at least two stocks named “LEAP”, either in the ticker or the company name. Obviously, a great name is the best reason to invest in any stock. Also, if you keep your written call at or above the breakeven point (including the premium you already paid on the LEAP), then it’s pretty much fail-proof. Short of the share price going to zero, anyway. For more on LEAPS, check out Rockydennis Presents - LEAPS.
LEAP - This is a disappointment. The farthest out option is October 15th. The strikes near the share price are trading at $01. Going to October, you could acquire the $10 call for $1.30 (so $130). Then you could sell a covered call in June for $.13. Problem is there’s only 5 months to October, so at that rate you won’t make your money back before expiration. What you COULD do is write September’s call deep in the money.
I take it back, this isn’t disappointing, it’s exciting. What about the May 21 $12.5 sell and $10 buy? Robinhood’s after-market numbers are inaccurate. Rather than making $13 on $1, it’s actually $5 on $148.
This one is a maybe. We’ll check back after market open. My thought is to buy the Oct 15th $10 call, and write $12.50 calls. I think it’s likely to see the price above $12.50, but I know nothing about this company. “But Rocky!”, you say with an air of frustration, “How are you going to pick a “maybe”?”. Look, we’re already committed. Just go with it.
LPTX - A penny stock that doesn’t trade options. ….Ew. I’ll stand by this as a pick, though. What I would do, is buy some shares, then put in a GTC sell order at $2.
CVM - The company name is CEL-SCI. Its product pipeline includes Multikine and Ligand Epitope Presentation Systems (LEAPS). LEAPS is categorized into LEAPS-H1N1-DC….Wait, H1N1 ? Further reading informs us that they are indeed working on therapeutics to treat severe flu infections. Scanning along, something about rheumatoid arthritis…alright, I’m sold. PMCC on the $20 strike appears attractive….the May 21st $30 strike is trading at $0.80 premium. I’d even say go for the $25, get that $1.30. Then next month we can just write at $30, and even if we get exercised we’ll make money.
Or we can just stay conservative and write $35. That’s like 4 and something % monthly return, right? This might be worth the risk, honestly. I might even tempt fate at $22.5 strike, but maybe I’ll just buy a put instead to play on a declining share price.
X - This American steel company has nothing to do with LEAPS wordplay, but I would go with the $22 long expiring 2023, and short the $32 call weekly. At the mid we buy in for $1,023 and collect $18 a week, so $92 a month. So 9% return a month. Not bad, not bad. If we were to get assigned for May 14th, we lose $5. That’s at the mid. We’re buying under-bid and selling over-ask, so our effective risk can be zero. Zilch, none, nada.
If you’re not feeling bullish, then write the call at $35. The share price did go up something like $4 last week, so there’s that to be aware of.
GE - A possible 6% return weekly on $1000, buying the $3 Call expiring Jan 2023, write at $13.5 strike. Hm, this deserves actual math. So $988 we put in regardless. If we sell the $13 and get exercised, we’ll make $12 + $37 =$49. So 4.9%, unless the share price closes below $13, in which it’d be 3.7%. Or 1.1% if we write the $13.5. But if it got exercised, that’d be $12+$50+$11 = $73. So a possible 7.3%
Since we strongly anticipate the price to go up, we could buy the $3 LEAP at market open. then wait until the price moves closer to $13.50 and secure a larger premium, if nothing else. Magic Math suggests an expected minimum 2.6% gain this way. So write the $13.50 limit for $0.26.
