Editors Note:

Same comments from last week. When markets are in rally mode, call premiums inflate and that is especially true with LEAPS calls. It takes a minimum of a 3% market drop to materially shrink those LEAPS premiums. We have not had a 3% decline in more than three months. We normally get about three per year. We need to be patient about adding a bunch of positions with inflated premiums.

I am still expecting that buying opportunity eventually. Once it appears, we could see a multi-month rally emerge from the other side. I do not want to load up on new positions until we do get at least a minor pullback of 3% to 5%. We have all the time in the world to wait.

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