Today, I want to talk to you about how you can take advantage of spring for trading and investing in the stock market.
The weather is transitioning and I personally love it! I love warm weather. Unfortunately, I live in Las Vegas and it gets crazy hot here. That part I don't like. But, I love springtime.
I look at this change in weather as an opportunity to make some money in the stock market.
Weekly Q&A and Home Depot ($HD)
Think about what everyone is doing when spring rolls around and the weather gets nicer.
They plant flowers. Lay sod. Or maybe even paint their houses.
One stock that comes to mind when springtime rolls around is Home Depot.
When people are planting flowers and renovating their homes, they have to get their supplies from somewhere.
Home Depot is one of the main places to get those supplies.
As a trend trader, I look for common movements in a stocks price to see how it changes year-over-year and quarter-over-quarter
As of this post, Home Depot's stock has a trend of going up around the beginning of May every year. It's a trend for them. So every year in May, I am on the lookout for Home Depot's stock to start going up so I can buy it.
Now, that doesn't mean their stock will always go up during that time but it is very common that it does. Which makes sense because that's around the beginning of spring when everyone is starting to plant flowers, clean up their yards and renovate their homes.
The home improvement industry is a $69 billion industry! So, someone is spending a lot of money on home improvements.
I would also say HD is a good long-term investment as well because someone will always be renovating or repairing their homes, planting flowers and other home improvements. So it's a good stock to trade as well as invest.
Qs Asked and Answered:
What is the worst case scenario when it comes to covered calls?
The worst case scenario with covered calls is that the stock could be called away from you meaning you would have to sell the stock that you have. Which isn't a bad thing as long as the amount of calls that you've sold matches the amount of stock that you have you should be fine because all you're doing is selling an agreement against stock that you already own.
When doing a covered call, will stock that is called away still generate profit?
Yes. In the covered call technique, you sell a call option at a higher price than what you bought the stock. So when it's called away you're going to get paid more for the stock than what you paid in addition to getting paid for the call option itself.
Stocks, Links and Resources Mentioned
Join the Conversation
What companies come to mind when you think of spring? I love hearing from you so leave me a comment below!