What to Do When RSI Is High

[] Today's market commentary from TradingPub is here! To view this email as a web page, go [here.]( To view this email as a web page, go [here.]( [] [] [] Focus on the ‘secret AI supplier’ and NOT the popular AI stocks — [learn why at 2:30 p.m. ET on Tuesday!]( What to Do When RSI Is High I receive a lot of emails. My favorite questions are about trading. Over the weekend, a reader responded to an article about the importance of covered calls. As I noted, the Relative Strength Index (RSI) on the SPDR S&P 500 ETF (NYSEArca: SPY) hit overbought territory last week. Typically, I prefer to sell calls on existing positions when we reach an RSI over 70 on the SPY. They wanted to know about the strategy, the critical components of the trade, and what they present to investors and traders. Today, I’ll explain covered calls and how they can help you boost returns and manage risk. Let’s dive in. What’s a Covered Call? Covered calls are considered a conservative trading strategy. An investor sells a call option on a stock that they own. So, anyone with 100 shares can sell one contract to another investor or trader. When we use the word “covered,” we’re talking about the investor owning the underlying stock. When you sell the call, it acts as collateral for the position. When you sell a call option, you give another trader the right, but not the obligation, to buy your stock if share prices increase to a predetermined price (strike price) within a specified time frame (expiration date). So, let’s consider a scenario where you own 100 shares of Ford Motor Co. (NYSE: F), the auto manufacturer. If you own 100 shares of the stock (currently trading at $10.30), the value of your position is $1,030. That’s the first step in starting this trade. It’s important to note that if the stock declines after you sell the call, you’ll still own it. It’s only if certain events happen that you would be required to sell the shares to the buyer of the option. When you sell the call option on the stock, you’ll sell a specific contract for a predetermined strike price on a particular expiration date. So, let’s look at various examples of strike prices and dates of expiration. Below is the options chain for Ford at two specific expiration dates. [] For example, the $12 call for February 16, 2024, currently trades for $0.15. [] But the $12 call for March 15, 2024, trades for $0.21. That additional six cents is linked to the option's time value, an essential piece of terminology. So, if you own 100 shares of Ford at $10.30, you can decide the better amount of money to generate. Do you want to sell and wait until March, or look to a price target sooner? In addition, consider selling the $11 call, given that it can generate an investor $45 instead of $21 on the $12 call. The money that investors receive for selling calls is called the option premium. In exchange for selling the call option, the investor receives a premium from the buyer. This premium is essentially income for the investor, regardless of whether the option is ultimately exercised. What Outcomes Can Happen? There are three different outcomes in this sort of trade. Suppose you sold the $12 call for March, but shares never reach that price. In that case, the option buyer would never exercise the option and take delivery of the shares. The seller gets to keep 100% of the profit and still owns the underlying shares. The second scenario is that the stock moves above $12, and the option buyer exercises the contract. The seller receives $1,200 for the 100 shares and keeps the premium. It’s important to note the strike price at which investors will sell the stock. They don’t get to keep anything above that level besides the option premium. The final scenario is that the stock pulls back. The sale of those contracts is a form of protection against the downside. If an investor plans to keep shares for the long haul, the continued selling of call options can generate income repeatedly. Trading covered calls can be one of my favorite strategies as an investor. It allows me to pick a price at which I’d be willing to sell, and I can generate income and protect my portfolio. As with any investment strategy, it's essential to conduct thorough research, assess individual risk tolerance, and stay informed about market conditions to make smart decisions in the ever-evolving landscape of financial markets. Over at Tactical Wealth Investor, I’ll teach my subscribers how to use covered calls next week, and the opportunities to generate income from already significantly discounted stocks. [] Chat soon, Garrett {NAME} *This is for informational and educational purposes only. There is an inherent risk in trading, so trade at your own risk. [] _______________________________________________ [] We Don’t Have Flying Cars yet, but We Do Have This… If you asked folks 50 to 60 years ago how technologically advanced we would be in 2023, they might say we’d have flying cars… Or jet packs… And while we don't have those just yet, thanks to my new friend, [we have something even better!]( An automated trading robot that does ALL the heavy lifting for you! [] That's right… This little guy can target 15% to 25% in extra cash flow every month — and you hardly have to lift a finger! So while we still have to sit in that dreaded 5 o’clock traffic… At least we don't have to sit glued to the computer screen stressing about our trades! That is just the beginning of what this robot can do for you… [Get the Full Story Here]( [] CFTC Risk Disclaimer: Trading in financial markets, including but not limited to futures, options, and foreign exchange, involves substantial risk and is not suitable for every investor. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. Past performance is not indicative of future results and that there is a substantial risk of loss in trading commodity futures, options, and off-exchange foreign currency products. You should be aware of the risks associated with trading and seek advice from an independent financial advisor if you have any doubts. Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under- or over-compensated for the impact, if any, of certain market factors, such as lack of liquidity. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. The information and strategies on this advertisement are for informational purposes only and should not be considered as financial advice. CFTC RULE 4.41: Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under- or over-compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs, in general, are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. [] _______________________________________________ [] Market Momentum is Green Momentum is Green despite news that the S&P 500 is falling from overbought conditions. *This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk. [] _______________________________________________ [] Want to get a link to my TradingPub articles as soon as they post? I’ve got you covered! Telegram is an entirely free messaging app and getting access is as easy as 1… 2… 3… 1. Download Telegram on your mobile device (Before you can add Telegram to your desktop computer, you must download the application on your phone and create your account: To download to your iPhone, [click here](. To download to your Android device, [click here](. After the download is complete, please create an account. NOTE: You can manage your privacy settings by clicking “Settings,” and then “Privacy & Security.” 2. Download Telegram on your desktop: Once you’ve downloaded Telegram onto your mobile device and created your personal account, you can download it onto your desktop computer. To download onto your PC, [click here](. To download onto your MacOS, [click here](. 3. Then add the Garrett {NAME} channel and you’re set: [9_jjnFuAvno0MjNh]( See you there! Garrett [] _______________________________________________ [] [] [] Focus on the ‘secret AI supplier’ and NOT the popular AI stocks — [learn why at 2:30 p.m. ET on Tuesday!]( What to Do When RSI Is High I receive a lot of emails. My favorite questions are about trading. Over the weekend, a reader responded to an article about the importance of covered calls. As I noted, the Relative Strength Index (RSI) on the SPDR S&P 500 ETF (NYSEArca: SPY) hit overbought territory last week. Typically, I prefer to sell calls on existing positions when we reach an RSI over 70 on the SPY. They wanted to know about the strategy, the critical components of the trade, and what they present to investors and traders. Today, I’ll explain covered calls and how they can help you boost returns and manage risk. Let’s dive in. What’s a Covered Call? Covered calls are considered a conservative trading strategy. An investor sells a call option on a stock that they own. So, anyone with 100 shares can sell one contract to another investor or trader. When we use the word “covered,” we’re talking about the investor owning the underlying stock. When you sell the call, it acts as collateral for the position. When you sell a call option, you give another trader the right, but not the obligation, to buy your stock if share prices increase to a predetermined price (strike price) within a specified time frame (expiration date). So, let’s consider a scenario where you own 100 shares of Ford Motor Co. (NYSE: F), the auto manufacturer. If you own 100 shares of the stock (currently trading at $10.30), the value of your position is $1,030. That’s the first step in starting this trade. It’s important to note that if the stock declines after you sell the call, you’ll still own it. It’s only if certain events happen that you would be required to sell the shares to the buyer of the option. When you sell the call option on the stock, you’ll sell a specific contract for a predetermined strike price on a particular expiration date. So, let’s look at various examples of strike prices and dates of expiration. Below is the options chain for Ford at two specific expiration dates. [] For example, the $12 call for February 16, 2024, currently trades for $0.15. [] But the $12 call for March 15, 2024, trades for $0.21. That additional six cents is linked to the option's time value, an essential piece of terminology. So, if you own 100 shares of Ford at $10.30, you can decide the better amount of money to generate. Do you want to sell and wait until March, or look to a price target sooner? In addition, consider selling the $11 call, given that it can generate an investor $45 instead of $21 on the $12 call. The money that investors receive for selling calls is called the option premium. In exchange for selling the call option, the investor receives a premium from the buyer. This premium is essentially income for the investor, regardless of whether the option is ultimately exercised. What Outcomes Can Happen? There are three different outcomes in this sort of trade. Suppose you sold the $12 call for March, but shares never reach that price. In that case, the option buyer would never exercise the option and take delivery of the shares. The seller gets to keep 100% of the profit and still owns the underlying shares. The second scenario is that the stock moves above $12, and the option buyer exercises the contract. The seller receives $1,200 for the 100 shares and keeps the premium. It’s important to note the strike price at which investors will sell the stock. They don’t get to keep anything above that level besides the option premium. The final scenario is that the stock pulls back. The sale of those contracts is a form of protection against the downside. If an investor plans to keep shares for the long haul, the continued selling of call options can generate income repeatedly. Trading covered calls can be one of my favorite strategies as an investor. It allows me to pick a price at which I’d be willing to sell, and I can generate income and protect my portfolio. As with any investment strategy, it's essential to conduct thorough research, assess individual risk tolerance, and stay informed about market conditions to make smart decisions in the ever-evolving landscape of financial markets. Over at Tactical Wealth Investor, I’ll teach my subscribers how to use covered calls next week, and the opportunities to generate income from already significantly discounted stocks. [] Chat soon, Garrett {NAME} *This is for informational and educational purposes only. There is an inherent risk in trading, so trade at your own risk. [] _______________________________________________ [] We Don’t Have Flying Cars yet, but We Do Have This… If you asked folks 50 to 60 years ago how technologically advanced we would be in 2023, they might say we’d have flying cars… Or jet packs… And while we don't have those just yet, thanks to my new friend, [we have something even better!]( An automated trading robot that does ALL the heavy lifting for you! [] That's right… This little guy can target 15% to 25% in extra cash flow every month — and you hardly have to lift a finger! So while we still have to sit in that dreaded 5 o’clock traffic… At least we don't have to sit glued to the computer screen stressing about our trades! That is just the beginning of what this robot can do for you… [Get the Full Story Here]( [] CFTC Risk Disclaimer: Trading in financial markets, including but not limited to futures, options, and foreign exchange, involves substantial risk and is not suitable for every investor. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. Past performance is not indicative of future results and that there is a substantial risk of loss in trading commodity futures, options, and off-exchange foreign currency products. You should be aware of the risks associated with trading and seek advice from an independent financial advisor if you have any doubts. Hypothetical or simulated performance results have certain inherent limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under- or over-compensated for the impact, if any, of certain market factors, such as lack of liquidity. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown. The information and strategies on this advertisement are for informational purposes only and should not be considered as financial advice. CFTC RULE 4.41: Hypothetical or simulated performance results have certain limitations. Unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under- or over-compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs, in general, are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown. [] _______________________________________________ [] Market Momentum is Green Momentum is Green despite news that the S&P 500 is falling from overbought conditions. *This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk. [] _______________________________________________ [] Want to get a link to my TradingPub articles as soon as they post? I’ve got you covered! Telegram is an entirely free messaging app and getting access is as easy as 1… 2… 3… 1. Download Telegram on your mobile device (Before you can add Telegram to your desktop computer, you must download the application on your phone and create your account: To download to your iPhone, [click here](. To download to your Android device, [click here](. After the download is complete, please create an account. NOTE: You can manage your privacy settings by clicking “Settings,” and then “Privacy & Security.” 2. Download Telegram on your desktop: Once you’ve downloaded Telegram onto your mobile device and created your personal account, you can download it onto your desktop computer. To download onto your PC, [click here](. To download onto your MacOS, [click here](. 3. Then add the Garrett {NAME} channel and you’re set: [9_jjnFuAvno0MjNh]( See you there! Garrett [] _______________________________________________ [] Disclaimer: The material in this document is for informational purposes based on our proprietary research. It is not an offering, specific recommendation, or a solicitation of an offer to buy or sell any securities mentioned or discussed herein. Any performance results discussed herein represent past performance, are not a guarantee of future performance, and are not indicative of any specific investment. Due to the timing of information presented, any investment performance reflected within this document may be adjusted after the publication and distribution of this material. There can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this communication will be profitable, be equal to any corresponding indicated historical performance levels or be suitable for your portfolio. Any investment results set forth in this document are not net of expenses and execution costs, nor do they account for other relevant trading or investment fees. Please visit thetradingpub.com/terms-of-service/ for our full Terms and Conditions. A TradingPub Publication ABOUT US: We believe that the opportunity for financial literacy and freedom belongs to all people, not just those who already have years of investing experience. TradingPub provides an array of educational services and products that will help you navigate the markets and become a better investor. Trading is made simple through our online forum full of trading techniques to give you the best tools to kick-start your investing journey. We offer collaborative webinars and training; we love to teach. No matter the opportunity, we bring together a strong community of like-minded traders to focus on analyzing market news as it’s presented each day. DISCLAIMER: FOR INFORMATION PURPOSES ONLY. The materials presented from TradingPub LLC are for your informational purposes only. Neither TradingPub nor its employees offer investment, legal or tax advice of any kind, and the analysis displayed with various tools does not constitute investment, legal or tax advice and should not be interpreted as such. Using the data and analysis contained in the materials for reasons other than the informational purposes intended is at the user’s own risk. DISCLAIMER: TRADE AT YOUR OWN RISK; TRADING INVOLVES RISK OF LOSS; SEEK PROFESSIONAL ADVICE. TradingPub is not responsible for any losses that may occur from transactions effected based upon information or analysis contained in the presented. To the extent that you make use of the concepts with the presentation material, you are solely responsible for the applicable trading or investment decision. Trading activity, including options transactions, can involve the risk of loss, so use caution when entering any option transaction. You trade at your own risk, and it is recommended you consult with a financial advisor for investment, legal or tax advice relating to options transactions. Please visit for our full Terms and Conditions. [Unsubscribe]( This email was sent to {EMAIL} by TradingPub 101 Marketside Ave, Suite 404 PMB 318 Ponte Vedra, Florida 32081, United States [] Disclaimer: The material in this document is for informational purposes based on our proprietary research. It is not an offering, specific recommendation, or a solicitation of an offer to buy or sell any securities mentioned or discussed herein. Any performance results discussed herein represent past performance, are not a guarantee of future performance, and are not indicative of any specific investment. Due to the timing of information presented, any investment performance reflected within this document may be adjusted after the publication and distribution of this material. There can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this communication will be profitable, be equal to any corresponding indicated historical performance levels or be suitable for your portfolio. Any investment results set forth in this document are not net of expenses and execution costs, nor do they account for other relevant trading or investment fees. Please visit thetradingpub.com/terms-of-service/ for our full Terms and Conditions. A TradingPub Publication ABOUT US: We believe that the opportunity for financial literacy and freedom belongs to all people, not just those who already have years of investing experience. TradingPub provides an array of educational services and products that will help you navigate the markets and become a better investor. Trading is made simple through our online forum full of trading techniques to give you the best tools to kick-start your investing journey. We offer collaborative webinars and training; we love to teach. No matter the opportunity, we bring together a strong community of like-minded traders to focus on analyzing market news as it’s presented each day. DISCLAIMER: FOR INFORMATION PURPOSES ONLY. The materials presented from TradingPub LLC are for your informational purposes only. Neither TradingPub nor its employees offer investment, legal or tax advice of any kind, and the analysis displayed with various tools does not constitute investment, legal or tax advice and should not be interpreted as such. Using the data and analysis contained in the materials for reasons other than the informational purposes intended is at the user’s own risk. DISCLAIMER: TRADE AT YOUR OWN RISK; TRADING INVOLVES RISK OF LOSS; SEEK PROFESSIONAL ADVICE. TradingPub is not responsible for any losses that may occur from transactions effected based upon information or analysis contained in the presented. To the extent that you make use of the concepts with the presentation material, you are solely responsible for the applicable trading or investment decision. Trading activity, including options transactions, can involve the risk of loss, so use caution when entering any option transaction. You trade at your own risk, and it is recommended you consult with a financial advisor for investment, legal or tax advice relating to options transactions. Please visit for our full Terms and Conditions. [Unsubscribe]( This email was sent to {EMAIL} by TradingPub 101 Marketside Ave, Suite 404 PMB 318 Ponte Vedra, Florida 32081, United States