In May 2020, Gaetan sent me his portfolio positions for the May 2020 contracts. His cash available was $33,000.00 and decided to diversify with 5 different stocks. I thought it would be a useful exercise to look at his positions and analyze what we believe his overall market assessment was at the time of his initial trade executions.

 

Gaetan’s 5 stock selections (see chart below)

  • 300 x Vipshop Holdings Limited (NYSE: VIPS)- purple line
  •  200 x ZTO Express (NYSE: ZTO)- pink line
  • 100 x Ciena Corp. (NYSE: CIEN)- brown line
  • 100 x Emergent BioSolutions Inc. (NYSE: EBS)- yellow line
  • 100 x RealPage, Inc. (NASDAQ: RP)- green line

 

Comparison chart with the S&P 500- blue line

 

3- Month Comparison Chart with the S&P 500

 

All 5 stocks were significantly out-performing the S&P 500 (blue line on bottom of chart) over the previous 3 months as trades were entered. VIPS (purple line) was showing a modest downtrend on the right side of the chart. Gaetan smartly selected an in-the-money strike which provided 5.6% downside protection of the 4.5% initial time-value profit.

 

Initial calculations with the multiple tab of the Ellman Calculator (click here for a free copy)

Initial Trade Calculations

  • The initial time-value return averages to 3.14% for the month (yellow cells)
  • Downside protection on 4 positions averages to 5.35% (brown cells)
  • Upside potential on RP is 2.2% (purple cell)

 

Discussion

Since 7 of the 8 contracts were written with in-the-money strikes, Gaetan is showing a defensive inclination for the May contracts. The initial time-value return of 3.14% shows a conservative investor with modest risk-tolerance. I consider myself, as well as most BCI members, to be in this category. Once we enter our trades, we immediately enter buy-to-close limit orders on the short calls based on the 20% guideline, if adhering to the BCI methodology.

 

Well done, Gaetan!

 

Click here to view a short video of our most recent Elite-Plus Calculator

 

Your generous testimonials

Over the years, the BCI community has been incredibly gracious by sending our BCI team email testimonials sharing stories as to what our educational content has meant to their families. Moving forward, we have decided to share some of these testimonials in our blog articles. We will never use a last name unless given permission:

Hi Alan,

I saw you on the virtual Money Show event in the spring and have been using your website, reading your blog and watching your YouTube videos. Lots of great information presented in a very understandable way- thank you.

Best regards,

Phyllis

 

Upcoming events

1.Wealth365 Summit

January 18th – 23rd, 2021

Information to follow

2.Long Island Stock Investors Group

February 9, 2021 at 7:30 PM ET

Zoom webinar- details to follow

3. AAII Research Triangle NC

April 10,2021 at 10 AM ET

Zoom webinar- details to follow

 

Alan speaking at a Money Show event

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Market tone data is now located on page 1 of our premium member stock reports and page 1 of our mid-week ETF reports.

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