SPCE is a company worth owning long-term; despite a 40% drop from entry, the covered call strategy keeps the position profitable.

Hey everybody, this is just a quick update, a Space X update, and it's more going to be on the math. So, if you're not a math wonk, you can just jump off right now, but this is going to go through the beginning of the trade all the way to now for the last uh 50 days or so.

Um, let's start with the looking at the chart and I'll just kind of walk through the chart. I uh obviously knew there was a risk that we're going to drop after the IPO, after it went up after the IPO, and I made a video about that before the IPO, but nonetheless, I want to own this company.

And so, I actually bought in and I bought a small amount partially to show you how to how to trade this in the money and partially because I wanted to be in it.

And I still want to be in it. And this campaign is just getting started. It's not even close to being finished. So, uh let me kind of show you. And I've got the trades uh announced here on the on in these little callout boxes.

And without going through every single one of them, I'm going to give you the quick overview. Obviously, we got in here pretty close to the top. Could have gone way up. So, anybody that's like, "Yeah, great great choice."

Yeah, it wasn't it wasn't an ideal spot on the chart. And and look, I'm not I'm not hiding from that.

So, but this is so that we can all learn and I'm learning, too. I always learn. But I want you I want to show you hang in there on a um on a a stock when it goes down. Okay, listen.

So I got in pretty close to the top. But I sold deep in the money here.

I I did the 170 strikes and 170 is about right down here, right? 170s right around in here. So I had these 170s. If you go back to the beginning of this playlist for SpaceX, which you should on my website here on the YouTube channel, you'll see that I had the 170s and as it got to the 170s, I defended my position.

So, there's a video on that and I moved it to this 155 strike.

When it got near the 155 strike, I moved it to the 145 strike. Okay. Now, I'm making money on the way down on the short position, but I'm also giving up money on the way down on the long position, which is a synthetic, a leap, an in the money call.

Okay. So, uh I moved it to 145. So, what what did it do? It kept going down, of course.

Actually, I moved the base position. I moved those to the hundreds. Okay? And then I defended my position again after I got to 135. I moved to the 125. Like it was just slapping me around.

And then from the 125, I moved to the 115. And I said, "That's it. Now I'm just going to start making juice." Um, and uh, I also started to shore up my base position. I moved my base from the 100 to the 75, the leaps, okay? And I moved them out a little bit.

And then I started to roll up. Now, when the stock went to 115, it obviously dropped a little bit further than that. Uh, and that was okay with me at that point because I I don't remember exactly the reason, but I didn't feel it was going down too much more.

And it did. It went down to 105, basically 104.

Uh, and then it turned around and then I started to move out of the money slightly. So, when the stock was at 128, I moved to the 130s. Okay? And then I moved to the 138s for the last couple of weeks, right?

I've been buying back to the 138s and now I want to be out of the money or at least at the money. Okay, so right now I'm exactly at the money.

Okay, so that's the beginning of this trade. That's how it sets up. So let me show you kind of the results of it. So I exported I have this program that we built here. Uh it's an AI powered uh thing.

Part of it is called the trade ledger. There's 15 other uh things over here that it does. Uh it is a covered call trading machine that essentially helps you implement AI.

And one of the cool things is called the trade ledger. And it takes all of the trades and it kind of summarizes them a little bit like this here is a a sell on the non-base position on the short position and then a buyback and then it gives you the net.

So, it starts here um you know in June and you you know you've got these uh short calls and essentially you see these are all net P&L numbers right because the stock is dropping like I said you're making money you're actually not losing money is the better way to look at it but you're making money on the short position while you're dropping money on the long position but this is just tracking the short position so as it rolled all the way down I'm I'm pocketing this P&L

Okay, meantime, I'm dropping some of this P being out on the base position. That's how you read this. So, up here is the base, the long position. Down here is the short position.

Does that make sense? And you could see I just move them uh and close them. And now I'm left with these two open positions. I have seven positions open and I'm short uh these seven positions against it. Right? So, let's just look here.

it it basically nets out the whole thing. Says I'm up $1,991 on this trade. Okay, it doesn't sound like a huge amount. So, let's go to the summary and see what the heck I've got into this.

Well, the base cost has is been has been 39,000.

That's the long position. The current market value of the base position is 46,000. Okay. The non-base, those are the short positions, I've realized 41,000. And on the non-base alive positions, the one that are still not closed out, I've lost, you know, because they're down from where I got them, uh, 2327.

Actually, they're up, but on P&L, they're down.

Okay. So, when it takes all of that in consideration and nets it all out, I'm up $2,000. Basically, 1991, pretty close to $2,000. So, the it it basically breaks it all down right in here, and then it puts it in this tile.

Now, let me show you what the tile shows us, right? The tile says, "Hey, look out. It's above your strike. The stock's above the strike. So, you're in the max profit zone. I'm not going to be able to make any more profit than I am at 138."

It's at 13842 or something like that, right? Uh 26, it says on the screen. So, that's my max profit. Awesome. I've got seven uh that are short and you could see uh watch out for it.

And then it basically says um you know kind of gives you like a little bit of a of a of a note. And then it says your current position is worth this. Okay. I think that's uh might be that might not be correct there.

I got to look into that. But anyway, bottom line is the net's correct.

And so it it tells you look here's your cost of the whole position. Everything we just kind of went through. And then it tells you how much of this position is paid for, which I think is really cool because my goal is to get a position paid for and then it's all just gravy.

So that's how I look at this. And I wanted to give a quick update.

Now look, I normally buy the right stock in the right market, I think, at the right spot on the chart, okay? And then I squeeze the juice, which is collecting the income. So we bought the right stock in my opinion.

SpaceX, I believe, has tons of great fundamentals. might be overpriced, might be not overpriced.

I just like the company in the right market. Well, the market is kind of yellow right now. Over the last 50 days, it's been yellow to green mostly. Little bit of red in there, but mostly yellow and green. Okay, so off and on on the market.

I would I didn't buy it at the right spot on the chart, but there wasn't a right spot on the chart. You don't know if the stock's going to go to 220 or 320 or 120, right? So, in an IPO, I just wanted to get involved and I did.

And um I've pretty much recorded the whole thing since we started this, you know, almost two months ago. Okay. And then we squeezed the juice.

The juice and the in the money concept while it was going down saved my butt, right? And I want you to understand that, you know, a lot of people are like, "Well, yeah, but if it's in the money, won't get won't it get assigned?"

You have a risk of it getting assigned because you've promised somebody else dibs on your stock, right? And so if they assign you, then you end up a short in a short position or you end up with um you know a position that's zeroed out if you have stock. So that's always a risk.

But if there's still exttrinsic value, the thing I call the juice, that's the income, then you're probably not going to get assigned, right? Because somebody could just go out and sell that on the regular market without having to uh you know go through the exercise of assigning you.

uh and they can just get the profit from the the price of the the stock because it's in the money uh or there's a little bit of juice left and why would they exercise and not get that juice?

So, it's when the juice gets squosen out as I say that that's when you might get assigned.

So, what we do is if you're cool getting assigned, you made your max profit on the trade, go you give yourself a pat on the back.

If you want to stay in it like I do, hopefully you don't get assigned and you just keep rolling it. Like today's Tuesday. Who knows if it's going to be above or below 138.

If it stays right here, I'm happy. Uh my goal is to stay in this one for a while and I will roll it to the next strike price according to my trading plan.

So hopefully the stock keeps going up and I'm going to keep kind of rolling it up. That's kind of my plan. So, I hope all of that makes sense. U you know, SpaceX is basically down, you know, 40% from the top of where I got in, but I'm still at a profit.

You can see the power of the in the money trade.

And now you could see the math behind that in the money trade and how I did it. Make sense? Uh you know, kind of freeze frame it. You'll see I made profit all the way down as I lost base position all the way down.

And now that it's going back up, I'm making money in base position.

But if it goes over my strike price, I'm losing what's called intrinsic value to the extent it's over the strike price. So, it all works out in the end because I'm in this for the juice.

And I know it's a little bit of a wonky concept for people that uh never trade in the money, but to me, it's a higher chance of it doing exactly what you want it to do. So, uh here I am in the money, and we'll see what happens on Friday. I'll see you soon.

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