Stephen Cox gave instructions on how members can access premium content, including recordings and trade details, and conducted a stock analysis of Dell, noting it is on the watch list, Stephen Cox suggested considering a dollar-cost averaging strategy. Stephen Cox detailed various investment strategies for Dell, including a long call strategy after Tom Walker inquired about it, and discussed trading and investing strategies for silver, gold, and copper, with Tom Walker also asking about copper. Stephen Cox gave an S\&P 500 market outlook, forecasting a 10% gain this year, and outlined a short put option strategy on SPY, including a discussion of low implied volatility, risk management scenarios after a question from Brendan O'Reilly 262626, and the rationale for using a shorter option expiry.
Details
Accessing Premium Member Content Stephen Cox provided instructions for members to access member meeting recordings and trade details on the knowledge base of the website. They clarified that premium members have access to more content, and login is required to read all alerts, as some content might be restricted to lower membership levels (00:02:57). Recordings and trade information will be housed in a simplified spreadsheet with links to video and text recordings, and open trade articles will be continuously updated with management decisions (00:03:53).
Dell Stock Analysis and Strategy Stephen Cox noted that Dell is on the watch list for long-term buy-and-hold investors, although they are not ready to buy yet due to an established short-term downtrend that needs to be broken (00:04:56). The main concern for the stock's recent fall is analysts' fear of squeezed margins, despite a significant backlog of orders for AI servers, due to the dramatically rising cost of memory chips (00:05:58). Stephen Vajda shared that they bought 300 shares of Dell the previous day, and Stephen Cox suggested applying a dollar-cost averaging strategy if the price drops further, although they prefer to wait for the technical downtrend to end (00:07:55).
Dell Investment Strategies and Competitors Stephen Cox mentioned that for Dell, a simple buy-and-hold strategy is viable, or a long call strategy like a LEAP could be applied when the timing is right. They identified Dell's main competitors as HP and Super Micro Computer, noting that Dell appears to be more discounted at the moment (00:06:59). Tom Walker later asked for a review of the long call option strategy for Dell (00:42:28).
Silver Trading Strategy Stephen Cox gave their take on silver, differentiating between trading and investing approaches. They stated that a trader would likely have sold yesterday or would sell today because the price failed to break through the previous high, while an investor would hold for the longer term (00:08:53). Stephen Cox predicted that if the trader's view prevails, silver could drop to around 65 before attacking the highs again, with a support level at 72 (00:09:57).
Gold and Copper Market Analysis Stephen Cox noted that gold is different from silver; as both a trader and an investor, they are holding gold, anticipating an attack on the previous high after a small retracement. Regarding copper, which Tom Walker inquired about, Stephen Cox considered the recent creation of a new high to be a bullish sign (00:10:52). As a trader, they would wait for a retracement, possibly to the 558 level, before establishing a position, while they remain bullish on copper long-term due to expected supply shortages driven by EV and renewable energy demand (00:11:52).
S\&P 500 Market Outlook Stephen Cox indicated that now is not the optimum time to sell put options on the S\&P 500 (00:12:57). They forecast a 10% gain for the S\&P 500 this year, barring unexpected geopolitical events or a significant rise in bond yields, and anticipate more frequent pullbacks this year than last, which would be the time to sell put options (00:14:08).
S\&P 500 Put Option Strategy and Platforms Stephen Cox outlined the short put option strategy on SPY, choosing the $650 strike for a January 30th expiry, emphasizing that the trade is not ready to be placed yet due to weak premiums and low implied volatility (IV) (00:16:18). They explained that a 30% return on investment is the target for their challenge account using the IG index platform, which is tax-free in the UK and Ireland but unavailable in the US and some other geographies (00:15:13) (00:21:23). The Interactive Brokers (IBKR) platform is recommended for worldwide traders (00:16:18).
Implied Volatility and Trade Timing Stephen Cox noted that the current IV rank for SPY is at five (on a scale of 0 to 100), indicating very low implied volatility, which results in weak option premiums (00:18:20). They are waiting for IV to increase before placing the first trade, though they recognize waiting for high IV (e.g., VIX closer to 20) might limit the number of trades placed throughout the year (00:19:25) (00:21:23). Brendan O'Reilly 262626 asked for the exact rule for trade timing, and Stephen Cox explained that while high IV is preferable, one could automate a blind strategy of placing a trade once a month (00:29:45).
Risk Management and Loss Scenarios Brendan O'Reilly 262626 asked about loss scenarios and management of the short put trade (00:23:30). Stephen Cox clarified that back-testing shows straight wins 87% of the time, rolling out and down 6-7% of the time, and losses in the remaining 7% of cases, typically during significant market crashes like the dot-com bubble/9/11 and the financial crisis (00:25:38). The rule for the IG index platform is to roll out and down to a later expiry and lower strike if the S\&P drops to 6600 (from 6931), or exit the trade by walking away if the put option value gets up to three times the original premium taken in (00:26:40). For IBKR, a trader can choose to take assignment or roll out and down at 660, with more options like a repair strategy using call options available (00:27:46).
Option Expiry and Theta Decay Brendan O'Reilly 262626 questioned the use of a shorter expiry than the usual five weeks (00:33:51). Stephen Cox explained that the optimum period for selling options is 30 to 45 days because the rate of decay of an option (Theta) increases dramatically closer to expiry, benefiting the seller. Stephen Cox's decision to target 12 monthly trades for the IG index challenge is why they are opting for shorter expiries, but for a personal IBKR account, they would advise sticking to the 30-45 day sweet spot (00:34:52).
S\&P 500 Strike Selection and Comfort Stephen Cox re-emphasized selecting the 650 strike price for the short put on SPY, noting it is slightly more out-of-the-money than typical rules would dictate, to align the break-even point just below the previous support level in case of a market sell-off. They also highlighted that their risk management plan, which includes rolling out and down to the low 600s by the end of February if needed, provides comfort for placing the trade soon, even if premiums are currently low (00:41:26) (00:48:53).
Long Call Option Strategy Details In response to Tom Walker's question, Stephen Cox detailed the long call option strategy for Dell, advising against placing it immediately. They recommend selecting an expiry greater than 90 days, ideally out to January 2027, and looking for a Delta of around 0.7 (00:43:38) (00:45:49). They clarified that this strategy controls the same number of shares for a quarter of the price compared to buying the shares outright, and explained that Delta indicates the contract's benefit per dollar increase in the stock price (00:44:41). They also briefly discussed the associated risks of a poor man's covered call strategy (00:46:50).
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