Publisher’s Note: The market’s at an all-time high.
But the real story is happening beneath the surface.
Capital is rotating. Fast.
Tomorrow, June 17 at 2 p.m. ET, JC Parets breaks down what’s actually working right now… the sectors pulling money, the technical setups worth watching, and what’s developing inside the Mag 7.
Plus, see the post-SpaceX rotation play most investors are missing. Join us live right here.
Stephen Prior, Publisher
Everybody feels like a genius right now, and that worries me.
The market closed Monday at fresh all-time highs. Peace is breaking out in the Middle East, oil has slipped back under $80, the small caps are ripping, and the headlines are calling it a peace dividend.
Money is pouring in from every direction, and the mood is pure euphoria.
But you see, I’ve lived through enough of these to know…
When everyone at the party is certain nothing can go wrong, that’s when you need to know where the exits are.
I’m not telling you to sell and hide.
I’m telling you that euphoria is when discipline pays, not when you toss it out the window.
Here’s the trap most people are walking into.
They’re so scared of missing the next leg up that they buy everything at full price, with no cushion, and just hope it keeps climbing.
I can’t afford hope-based investing, and neither can you.
Hope is not a plan. It’s what you reach for after you forgot to make one.
So, let me show you one of my favorite ways to stay in the game without paying full freight.
The In-The-Money Covered Call
Most people think a covered call means buying a stock and selling an option a little above where it trades.
That’s the timid version, and it gives you almost no protection.
I do the opposite. I sell a call with a strike well below the share price, deep in the money, which hands me a thick stack of cash up front and a real floor under the position if the stock falls.
Let me show you why that matters, with a real one I’m still holding from back in January. We put it on in the War Room.
Nike (NKE) was a beaten-down name with insiders quietly buying, the kind of show-me stock I will own only if I’m paid enough to wait.
It was trading around $63. I bought the shares and sold a call all the way down at the $55 strike, more than a year out.
That sale, plus the dividends I collect along the way, dropped my true cost to roughly $47.80 on a $63 stock.
Now here is the part that matters, because the trade has been tested.
Nike didn’t go up. It got cut down to around $45 today, a drop of nearly 28% from where I bought it.
That’s a gut punch in any portfolio. But watch what the structure did with it.
Had I simply bought the stock at $63, I’d be down 28%, sick to my stomach about it, and tossing out my retro, all-white Air Force 1’s.
Had I bought call options instead, betting on the bounce, a drop like that would likely have wiped me out completely, because options expire, and that one would be deep underwater with the clock running.
Instead, my cost was under $48, so with Nike near $45 I am down only a couple of dollars, I’ve kept every penny of premium I sold, and I’m still collecting the dividend while I wait.
The deep-in-the-money call absorbed almost the entire fall.
That’s the whole argument.
The stock dropped more than a quarter of its value and the position barely flinched. And if Nike simply climbs back above $55 by expiration and gets called away, the trade returns roughly 15% on my cost, dividends included.
Protected on the way down, paid while I wait, with a defined gain if it recovers. Try getting all three from a stock or a call on its own.
You don’t need to chase the hottest name at the top. And you don’t have to be all in cash either.
There are ways to make money, while waiting for better opportunities.
You need to get paid to be patient, with a floor underneath you for the day the party ends. And the party always ends.
There’s always another storm coming, and the only question is whether you built your shelter while the sun was out.
YOUR ACTION PLAN
This is exactly the kind of market environment in which knowing where the money is moving matters more than anything else.
Tomorrow, June 17 at 2 p.m. ET, JC Parets joins CJ live to break down the sectors pulling money right now and the post-SpaceX rotation play most investors are missing.
The next time this market hands everyone a scare, I’d rather you be the one getting paid through it. Join us here.