We closed nine trades across all of our services last week, eight of which were winners. Our highest-earning trade was once again from the 5K Challenge program. We booked $1,600 in cash in the live account from a Meta Platforms (META) diagonal call spread that was open just eight days.
Here are all of the closed trades from the week of Feb. 3-7:
The one loss we took last week was the Celsius Holdings (CELH) covered call in Options Income Weekly. While it was the first significant loss we’ve booked in that program in nearly six months, it was a big one. There’s no getting around that.
We traded CELH successfully numerous times in both Options Income Weekly and the Income Masters program going back to mid-2023.
We took advantage of the bullish trend and high implied volatility rank (IVR) as CELH stock surged in popularity, driven by strong revenue growth and increasing market share in the energy drink market. The company’s focus on healthy, fitness-oriented beverages resonated with consumers, fueling investor enthusiasm.
But in mid-2024, shares encountered headwinds as the company reported its first quarterly decline in revenue since 2018. This unexpected slowdown, attributed to supply chain challenges and increased competition, significantly impacted investor sentiment.
Concerns about slowing consumer spending and the broader economic outlook didn’t help matters, and CELH stock continued to decline into 2025 with any attempts at recovery thwarted.
In the company’s most recently reported quarter, revenue declined 31% year over year to $265.7 million, primarily due to a significant decrease in sales to its largest distributor. Net income fell 92% to $6.4 million.
Despite the revenue decline, Celsius’ management team emphasized its focus on long-term growth initiatives, including international expansion and new product launches.
We entered our latest CELH trade in Options Income Weekly in late May. We were assigned shares a month later and have been selling calls ever since to generate income, building up $1,225 in option premium. Unfortunately, this was not enough to offset the steep decline in shares.
With the company expected to report earnings later this month, we decided it was best to cut our losses and put the capital to use elsewhere. We believe we can make up the loss faster with other positions rather than waiting for a rally in CELH that could take many months to materialize.
One way we plan to boost our returns in the Options Income Weekly program is with the use of spreads, specifically what’s sometimes referred to as the poor man’s covered call (PMCC).
Options Income Weekly members are no strangers to covered calls. They’ve used them effectively to generate income, often resulting in larger cash wins than selling cash-secured puts. But covered calls can be expensive, especially when trading higher-priced stocks, as they require you to buy at least 100 shares of the underlying stock or ETF.
With a poor man’s covered call, instead of buying shares, you buy a later-dated in-the-money (ITM) call option, usually three to six months out, which is significantly cheaper than owning shares. You then sell a short-term out-of-the-money (OTM) call option to collect premium.
A PMCC is typically used as a stock replacement tactic on an equity that you want to trade over and over for income. Like a covered call, it can be set up with a neutral or bullish bias. The goal is to exit the trade by selling the long call option at a later time or after significant appreciation in the underlying.
The lower capital requirement compared with a covered call results in lower exposure and also can potentially allow you to trade more contracts, thus increasing your income potential.
Of course, as with any options strategy, there are risks. A PMCC is an undefined-risk trade, just like a covered call or cash secured put. If the price of the underlying declines significantly, the value of the long-term call option can decrease, potentially leading to substantial losses. Plus, while time decay generally works in your favor for the short call, the long-term call you bought will also experience time decay, which can erode potential profits. Finally, since you do not own the shares, you are not entitled to any dividend payments as you would be if you were trading a covered call.
Given these risks, stocks that are good candidates for trading poor man’s covered calls are solid companies with a reasonable valuation, such as Dow stocks and other blue-chip companies. In other words, you’re looking for less volatile stocks with solid fundamentals that you expect to trade higher or, at the very least, not sell off sharply.
For our first PMCC in the Options Income Weekly program we traded blue chip Walmart (WMT). With shares of the retailer trading around $97.40 at the time we entered the trade in late January, it would have cost us close to $10,000 to purchase 100 shares for a covered call strategy.
Instead, we bought the WMT 20 Jun 80 Call for $19.27. And we sold the WMT 14 Feb 100 Call for $0.73. We executed both legs in a single transaction for a net debit of $18.54, or $1,854 per contract. Given the lower capital commitment, we traded two contracts, costing us a total of $3,708. Even with the call premium factored in, had we traded even just a single covered call contract it would have cost us $9,667.
Since we paid to enter the trade, we were looking to exit it at a credit that was greater than the debit to enter. However, we did not set a target exit price for this particular trade, opting instead to wait to see how shares traded in the days ahead.
As you can see in the chart below, WMT ran up after we entered the trade on Jan. 29.
By Feb. 4, our long call was trading for around $22, and we decided to take profits off the table. We sold the long call and bought back the short call for $1.79, or $1.06 more than we sold it for. But we made $2.73 on the long call, netting $1.67, or $167 per spread. Since we traded two contracts, our total profit was $334 for a 9% return in just six days.
This is a strategy we will continue to use in the Options Income Weekly program to generate income and target attractive rates of return on solid stocks. And since it greatly reduces capital requirements, we can target some quality stocks whose high share price previously put them out of reach for some members.
What will our next PMCC stock be? Stay tuned.
