Dogs of the Dow Portfolio (DOW)
Dow Inc. (DOW)
DOW is currently trading for 57.80.
We currently own the DOW January 16, 2026, 40 call LEAPS contract at $15.85. You must own LEAPS in order to use this strategy.
*If you are new to the position, based on our approach, the LEAPS contract that works best is the one with a current delta of roughly 0.80: the January 16, 2026, 45 calls.
We typically initiate a LEAPS position, with a delta of roughly 0.80, that has roughly 18 to 24 months left until expiration.
Here is the trade (you must own LEAPS in DOW before placing the trade, otherwise you will be naked short calls):
Buy to close the DOW March 22, 2024, 56 call for roughly $1.86. (Adjust accordingly, prices may vary from time of alert.)
Once that occurs (or if you are new to the position and already own LEAPS):
Sell to open the DOW April 26, 2024, 60 call for roughly $0.78. (Adjust accordingly, prices may vary from time of alert.)
Premium received: 4.9%
Once the initial LEAPS purchase occurs, we maintain the position and focus on selling near-term call premium against our LEAPS, lowering the original cost basis of $15.85 (or the price at which you purchased your LEAPS) with each and every transaction.
We can continue to sell calls against our LEAPS contract every month or so to lower the total capital outlay. But remember, options have a limited life, so when we get closer to the LEAPS contract’s expiration, we will simply sell the contract and use the proceeds to continue our poor man’s covered call strategy in DOW.
Buffett’s Patient Investor Portfolio Alert (GOOGL)
Alphabet (GOOGL)
I’m going to lock in profits of 62.5% here and look to enter a new position in Alphabet (GOOGL) early next week. I’ll be entering a new position with 2026 LEAPS. Since we added GOOGL to the portfolio the stock is up 25.6%, while our poor man’s covered call position is up 62.5%.
GOOGL is currently trading for 151.29.
Here is the trade:
Buy to close GOOGL April 19, 2024, 150 call for roughly $4.75. (Adjust accordingly, prices may vary from time of alert.)
Once that occurs:
Sell to close GOOGL January 17, 2025, 100 call LEAPS for roughly $56.40.
As always, if you have any questions, please do not hesitate to email me at andy@cabotwealth.com.
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