A stock OPTION is a contract that gives you the right—but not the obligation—to buy or sell shares of an underlying stock before a certain date, called an EXPIRATION DATE.

THE BENEFITS OF AN OPTION

THE TWO BASIC OPTIONS

CALL – Pick UP and call

Call options are for when you’re expecting a stock’s value to go UP. A call is the right to buy a stock at a predetermined price (the strike price) on or before the expiration date.

Useful for:
• Profiting from a stock’s gain without paying full price for the stock

• Limiting your downside risk in your portfolio equal to the income received from the option

PUT – Put down the phone

Put options are for when you’re expecting a stock’s value to go DOWN. A put is the right to sell a stock at a predetermined price (the strike price) on or before the expiration date.

Useful for:
• Profiting when a stock loses value

• Protecting your portfolio against losses in an existing position

Example options trade

THE BASIC CALL – CONDITIONS:

• You’re bullish on stock XYZ
• XYZ is currently trading at 50, but you think it’ll go to 60 by December
• You want a small cash outlay versus buying the stock
• You want leveraged profits with limited downside risk

Maximum Risk: Premium Paid
Upside: Unlimited
Breakeven Price = Long Call Strike Price + Premium Paid

XYZ – December 50 Call Option
Premium: $4.50
1 Contract (right to buy 100 shares of XYZ at $50/each)=
$450 Total Investment

FACTS ABOUT OPTIONS

• Options are a derivative, which means you’re not trading the asset itself, but simply a contract based on the asset. Since you do not have to buy the underlying asset, options have a lower upfront cost than stocks.
• The per-share price of an options contract is called the premium. One option contract grants the right to but or sell 100 shares.

THE BASIC PUT – CONDITIONS:

• You’re bearish on stock ZYX
• ZYX is currently trading at 40, but you think it’ll go to 30 by December
• You want to short the stock, but would prefer a lower risk if the trade goes against you

Maximum Risk: Premium Paid
Upside: Unlimited
Breakeven Price = Long PutStock Price – Premium Paid

ZYX – December 40 Put Option
Premium: $3.50
1 Contract (right to sell 100 shares of ZYX at $40/each)=
$300 Total Investment

• Trading an option requires two parties, a BUYER and a SELLER (or WRITER). The Buyer holds the option to exercise the contract and can do so before the expiration date, while the Seller holds the obligation to fulfill the contract if it is exercised.
• Expiration dates are listed in the form of month and year (e.g. March 2020), and usually expire on the third Friday of that month.

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Term Life Insurance

Term life insurance lasts for a set number of years before expiring. If you die before the term is up, a set amount of money known as the death benefit, is paid to your designated beneficiary. Term life insurance policies are considered to be more affordable than other life insurance policies.

Whole life insurance

Whole life insurance is considered permanent life insurance coverage since it does not expire. It has a death benefit but also a cash value, which is tax deferred savings account that is included with the policy. The cash value accrues interest at a predetermined fixed rate. Whole life lasts as long as you pay the premiums.

Universal Life Insurance

Universal life insurance has a cash value, just like a whole life insurance policy. Your premiums go towards both the cash value and the death benefit. You can also adjust the death benefit within the limits outlined in you policy.

Variable Life insurance

Variable life insurance is similar to whole life insurance in that they both have a cash value, but the functions of the cash values are quite different. A variable life insurance cash value, is geared more to investing. The money paid into the goes into a series of mutual fund-like sub accounts the you can add growth.

Variable universal life insurance

Variable universal life insurance is a combination of a variable life insurance policy and a universal policy. Variable Universal life policies take the best of the two policies: adjustable premium and adjustable death benefit while investing the cash value.

Long Term Care

Long term care insurance is designed to cover long -term services and supports, including personal and custodial care in a home setting, community organization or other facility. Long-Term care insurance reimburse the policy holder a daily amount for services to assist them with daily living activities.

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What Plans are available for Self Employed?

• Solo 401(k)
• Simplified Employee Pension (SEP IRA)
• Savings Incentive Match Plan for Employees (SIMPLE IRA)
• Profit Sharing

Features of the Solo 401(k)

• Best for: Self-employed individuals and partnerships without full-time employees (other than a spouse or business partner)
• Employee Contributions: When contributing as the employee, the contribution limit for tax year 2019 is up to $19,000 in elective deferrals, or $25,000 for ages 50 and up.
• Employer Contributions: For tax year 2019 is 25% of compensation. Total contributions (employee + employer) cannot exceed $56,000 below age 50 and $62,000 for ages 50 and up.

Features of the Profit Sharing Plan

• Best For: Self-employed individuals and small business owners with up to 100 employees
• Employee Contribution Limits: Not applicable
• Employer Contribution Limits: Lesser of 25% of compensation or $56,000 for 2019

Features of the Simplified Employee Pension (SEP IRA)

• Best For: Self- employed individuals and small business owners
• Employee Contributions: Not applicable
• Employer Contributions: Lesser of 25% of compensation or $56,000 for 2019 Employer is not locked into making contributions each year and can decide whether and how much to contribute to employees accounts (note: if employers do contribute, must contribute for all participants who are eligible for pla)

Features of the Savings Incentive Match Plan for Employees (SIMPLE IRA)

• Best For: Small business owners with up to 100 employees
• Employee Contribution Limits: Up to $13,000 in salary deferrals ($16,000 for those 50+) for 2019
• Employer Contribution Limits: Match employee contributions up to 3% (can reduce to 1% in any two out of five years) OR contribute 2% of employee’s compensation (even if employee is not making deferral contributions)

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By: Todd Carbone

We are off to a great start in themarket for 2021. The market hasalready priced 2.5% for the S&P 500,4.28% for the Nasdaq, and 1.85% forthe Dow Jones of gains for the firstthree weeks of 2021. In addition, themarket has priced out a lot of theuncertainties from 2020. The start ofthe 2021 market, has the same feelingas the beginning of the Obamaadministration with the aftermath ofthe financial crisis, but instead, wehave a health crisis. Unsurprisingly, wehave the federal reserve giving theblessing of low-interest rates andpotential for additional quantitativeeasing.

Throughout history, the market hasfavored a democratic president, dueto fiscal spending via infrastructureand social well-being. The market iscurrently pricing a phenomenal 4-year term, thus why the market is hitting all-time highs already in2021. The market is a forecast of thefuture, not that the future can bepredicted, but it does take intoconsideration similarities andcommon characteristics. At thebeginning of the Obamaadministration on, January 20, 2009,through January 20, 2017, the S&P500 grew 171%, the Nasdaq grew264% and the Dow Jones grew147%!

We highly suggest adding funds to your current portfolio. If you have beenwaiting to put money to work, start adding to starter positions to get back intothe market. The market has just started to grow, it is not too late to add intopositions. Adding funds even in an upmarket is prudent, as long as you haveselling rules in place to preserve capital for market pullbacks. Take advantageat all levels, as there is always trade or a position that fits the marketconditions.

It is the Capital CS Group’s mission to change the way wealth is viewed,not as an independent journey, but as a path guided by a team ofprofessional financial advisors and a proven goal based financialplanning approach.

The Capital CS Group has demonstrated successful navigation of alltypes of markets through our in-depth financial planning processdeveloped over our 28 years of industry experience.

The post Market Update – Now is the right time to add your investments! appeared first on Capital CS Group.

By: Todd Carbone

I can’t believe it…. the year end is upon us and its been a memorable one. I feel like we’re on the 1- yard line, 4th quarter on our last down with 10 seconds to go. It is probably the best example I can demonstrate with the current market conditions. We are in a wait and see moment as the story unfolds in front us. With Presidential Elections next week, corporate earnings, a new wave of corona virus infections, a race to a vaccine and a new stimulus bill, this has been an interesting final quarter. With all of these factors and the current market conditions, the market is acting accordingly, which is nice for a change. There’s nothing worse than having bad market data and the market goes through the roof. This is why we follow the golden rule “The trend is your friend, until it’s not.” We were trending nicely for a bit, but now we have sideways action which is often driven by news. Trading news is nearly impossible because one moment is good, then next minute the news is bad. This type of choppy sideways market is great for swing traders, but often too difficult to risk manage, unless you have a system in place.

The good news is this sideway action, often allows investors to re- enter stocks that they have missed this year while buying at a possible discount. These entry points often present themselves as a Consolidation, Cup and/or Cup and Handle pattern. If market conditions remain healthy, then you will see investors buy into these technical patterns, this is because the “Expectation” is for these stocks to go higher. Now on the downside if these patterns fail, then the selling has not stopped and often most will retract to their prior lows or even lower.

Plan of action – Review your current positions, come up with a game plan and know your limits! Remember that days like today are only one data point, compared to 252 days of data during one full trading year.

Stay tuned.

Nasdaq
YTD Return : +26.67%
DJIA
YTD Return : -3.08%
S&P
500 YTD Return : +5.11%

It is the Capital CS Group’s mission to change the way wealth is viewed, not as an independent journey, but as a path guided by a team of professional financial advisors and a proven goal based financial planning approach.

The Capital CS Group has demonstrated successful navigation of all types of markets through our in-depth financial planning process developed over our 28 years of industry experience.

The post Market Update – The year end is upon us appeared first on Capital CS Group.

By: Todd Carbone

As of yesterday, the Stock indexes have declined solidly, with the Nasdaq down 3.02%, deepening its slide into correction. As of September 1, 2020, the Dow Jones is down 8.77%, the S&P 500 is down 10.34% and the Nasdaq is down 12.39%. In historical realities, the stock market has typically performed the poorest during the month of September. This has been dubbed as the “September

Effect.” This year has added risks, with the upcoming presidential election. During these uncertain and volatile times, it is prudent to begin building a cash position. This includes booking winners and losers, to ensure your portfolio is in capital preservation mode. Our Senior Portfolio Managers have been building a strong cash position by taking partial profits on winning leading stocks and reducing losses on losing stocks in the last month. Now is the time to look at your positions and ensure you are looking for

signs of institutional selling and breaking down of support levels. With the November 3rd election day less than 7 weeks away, we are expecting a surge in market volatility, with large daily swings. This can be a especially concerning, if you are using leverage or margin to purchase securities. Be conservative and reduce exposure when appropriate, as the market ride is just beginning to be bumpy. Building a strong

cash position, will give you the ability to take advantage of buying high quality positions, with less risk when the market dictates a rebound. Cash is king for now…

It is the Capital CS Group’s mission to change the way wealth is viewed, not as an independent journey, but as a path guided by a team of professional financial advisors and a proven goal based financial planning approach.

The Capital CS Group has demonstrated successful navigation of all types of markets through our in-depth financial planning process developed over our 28 years of industry experience.

The post Market Update – Sliding into correction territory appeared first on Capital CS Group.

By: Todd Carbone

Selling was due. We had an over extended market that was due for a sell off. This sell off is a little concerning with the NASDAQ down 8% in the last two days, which meets the criteria for a correction. Corrections happen all the time during the marketplace. It allows the market to reset between buyers and sellers.

It also provides opportunity for people to get into the leading stocks at a cheaper price. One thing that is concerning is the volume on this sell was higher than the two previous sales this year, including the sell off during the start of the Coronavirus pandemic. The volume is currently high, making this selling real. We do not know how this next quarter will be, especially with the upcoming

presidential election. If you are looking to book profits, take a look at your current portfolio and analyze what positions you have, checking to see if your positions are still holding the 50 day and how the price action has been. If you are looking to add new positions, look at adding only 25 to 30% of your max position size.

Also, add into the leading stocks if they are holding on the 50 day, because if you do break the 50 day your loss will be much smaller.

It is the Capital CS Group’s mission to change the way wealth is viewed, not as an independent journey, but as a path guided by a team of professional financial advisors and a proven goal based financial planning approach.

The Capital CS Group has demonstrated successful navigation of all types of markets through our in-depth financial planning process developed over our 28 years of industry experience.

The post Market Update – Selling was due. appeared first on Capital CS Group.

By: Todd Carbone

Well Ladies and Gentlemen-

Since my previous article, the market continues to move higher. In fact, the Nasdaq has hit all-time highs, while the Dow Jones and S&P 500 are still trying to play catch-up. Fund mangers and Institutions are continuing to push their BUY buttons, which is the signal an individual investor wants to see when adding to their portfolios. If you are still waiting on the sidelines,now is the time to take advantage of down days in the market and add where appropriate.

With any market rally, this current market is due for some selling or sideways action, which is totally healthy for a normal market. Now that we are halfway through the year and summer is finally here, if you have any positions that have not been performing or are lagging, consider replacing them. The ”hope” trade is costing you money!

If you are in a long-term portfolio with mutual funds or ETFs, it is time to review your positions and rebalance your current allocation. Taking time to rebalance your portfolio, will help you stay within your risk tolerance. Also, by selling your losers and buying your winners,

it will keep you properly balanced and diversified. Lastly, if you are still using mutual funds, it is time to review the internal fee schedule and its performance category against its peers. The internal fees from mutual funds can easily be avoided and can save you a lot of money each year by switching into an ETF model. If you are ok paying mutual fund fees, make sure your mutual fund manager is in the top performance group.

If you have any questions, please contact our team. Stay safe out there and try to have some fun in the sun!

It is the Capital CS Group’s mission to change the way wealth is viewed, not as an independent journey, but as a path guided by a team of professional financial advisors and a proven goal based financial planning approach.

The Capital CS Group has demonstrated successful navigation of all types of markets through our in-depth financial planning process developed over our 28 years of industry experience.

RETIREMENT CONTRIBUTION REMINDER

The July 15, 2020 nationwide deadline for filing an individual federal income tax return for tax year 2019, or requesting an extension, is approaching. It is also the deadline for you to make certain contributions to your Individual Retirement Accounts (IRAs),Roth IRAs, and Coverdell Education Savings Accounts.

The IRS contribution limit to an IRA for tax year 2019 is $6,000. However, anyone over age 50 and under age 70½* who has a traditional IRA is entitled to make an additional “catch-up” contribution of up to $1,000, for a total of $7,000. Roth IRA participants may continue to make annual contributions up to that $7,000 limit after age 70½.

Contact us today to coordinate your contribution or to establish and fund new retirement account before it’s too late.

The post Market Update – The “Hope” Trade is Costing You Money! appeared first on Capital CS Group.

By: Todd Carbone

Lately, we have been receiving several calls with the same sentiment; the market is going to start heading into negative territory due to the overall effects of the Corona Virus and the depression is coming, as soon as, the general population has run out of money. In addition, society is forecasting a potential second wave of Covid19 cases, which could have a negative impact on the market. These are all possibilities, but the real question, do you remain on the sidelines and wait to invest? In our humble opinion, we believe now is the time to invest, let us explain why.

If we tried to think of everything that could go wrong, we would go crazy; In fact, we probably would never leave our houses. On the contrary, maybe we should be crazy and think of everything that could go right! I personally was raised as a pessimist, were the glass was always half empty. Having been trained as a trader and investor, we are taught to not be emotional about the market. The market does not have feelings or emotions. The market does not care if we are feeling stressed or unable to sleep because an investment is moving in the wrong direction. Over the years, we have learned as traders and investors, the glass is not half empty or full, it simply does not exist.

The S&P 500 for 2020, is still down from its all-time high by 10.50% and is continuing to play catch up, while the Nasdaq is the current market leader. In addition, the small cap space, has also seen a strong comeback rally from the beginning of this year. With the small cap space making a comeback, this debunks the theory of going into a depression, since small caps are the first to break down when heading into a depression. In addition, the “VIX”, also known as the volatility index, which portrays cost of portfolio insurance in comparison to the level of risk in the market, has collapsed to 27.00 from 85.47, which is down 68%!

When looking back at our last article, the Nasdaq has rallied 45%! Did your emotions pay off by not investing in this opportunity? No, in fact it cost you money. Maybe your new perspective is you will wait for the next crash, then you can say “I told you so.” Where ever you stand as an investor, you need to ask yourself, when and what will make you comfortable, if anything?

In summary, the market is not pricing in a depression or collapse, so why should you? Is the market going to listen to us, definitely not. The trend is our friend, markets grow over time with a 55% probability of success. When starting to get your feet wet as an investor, it is important to start with smaller position sizes and most importantly, have a selling strategy if things do not happen as planned– remember, something all ways happens. Failing to prepare, is preparing to fail. Get off the sideline!!!

It is the Capital CS Group’s mission to change the way wealth is viewed, not as an independent journey, but as a path guided by a team of professional financial advisors and a proven goal based financial planning approach.

The Capital CS Group has demonstrated successful navigation of all types of markets through our in-depth financial planning process developed over our 28 years of industry experience.

The post Market Update – Failing to Prepare is Preparing to Fail appeared first on Capital CS Group.