We closed 12 trades across all of our services last week, 11 of which were winners, generating a combined $2,763 in cash.
Here are all of the closed trades from the week of Feb. 10-14:
The one loss we took — on the S&P 500 (SPX) double diagonal in the 5K Challenge program – was more than offset by another successful Meta Platforms (META) diagonal call spread. This was once again our highest-earning trade of the week, as we netted $864 on four contracts for a nearly 12% return in just six days. This followed the $1,600 in cash booked the previous week from another META diagonal call spread.
Given that the strategy is working so well for us this year, we entered another position in META on Friday after the market responded positively to President Donald Trump declining to enact reciprocal tariffs.
While 5K Challenge took the prize for the largest single winning trade, the Income Masters program saw the most income generated. Members closed five profitable bull put spreads, and we booked more than $1,150 on those trades in the live account.
Bull put spreads are a go-to strategy in many of our services. These defined risk trades allow us to generate income upfront while limiting our capital requirements. Since we’re leveraging our capital effectively, we can scale up the number of contracts we trade to generate more income.
We also found success again with a strategy we recently introduced in the Options Income Weekly program.
Known as a “poor man’s covered call” (PMCC), this strategy aims to replicate the returns of a traditional covered call while requiring less upfront capital. Instead of buying shares, it involves buying a long-term, deep-in-the-money call option and selling a short-term, out-of-the-money call option.
For a more in-depth look at this strategy, check out last week’s Weekly Income Report where we cover the pros and cons of PMMCs. We also review how we successfully used it with blue-chip retailer Walmart (WMT), earning $334 in cash and a 9% return in just six days. What’s more, we reduced our capital commitment by 80% versus a traditional covered call strategy.
We noted last week that PMCCs are best suited to solid, less volatile companies with reasonable valuations. So, just two days after we closed the WMT trade, we again turned to a PMCC, this time with Apple (AAPL).
We purchased the AAPL 20 Jun 215 Call and sold the AAPL 21 Feb 240 Call. We executed both legs as one trade, costing us a net debit of $24.69. Since we traded two contracts, our total capital commitment was $4,938.
At the time we entered the trade, AAPL shares were trading for $231.45, meaning that if we had wanted to sell just one covered call, we would have needed to put up $23,145 to purchase 100 shares of the underlying stock. Unless you have a very large portfolio, that’s a lot of dough for a single trade.
Once again, we opted not to set a target exit price on the trade. But as stocks rebounded on Wednesday, following an initial sell-off after the release of the latest consumer price index (CPI) report, the profits were simply too good to pass up.
We exited the trade for a credit of $27.38, earning $269 per spread, or $538 for two contracts, for a nearly 11% return in less than a week.
Since we entered our first PMCC in the Options Income Weekly program on Jan. 29, we’ve made almost $900 trading this strategy.
All in all, last week was profitable for each of our services despite the intraday gyrations of the market.
I’m on vacation this week, but I’m looking forward to seeing many of you next week in Florida for Investor’s Blueprint Live. Until then, good luck trading.
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.
