Using the CEO Strategy with a $25k Portfolio – May 13, 2024
The CEO Strategy is a streamlined version of covered call writing, where we use only 11 underlying securities, the Select Sector SPDRs. This article will utilize a real-life example of how we can craft a CEO Portfolio with $25,000.00 cash available. First, some definitions.
CEO Strategy
- Acronym for Combing Exchange-Traded Funds with Stock Options
- Pool of underlying securities is the 11 Select Sector SPDRs, exchange-traded funds
- Only 4 of our 14 available covered call writing exit strategies are considered
Exchange-traded funds (ETFs)
Baskets of stocks that track an index, a commodity, an industry or a basket of assets like an index fund, but trade like a stock. They offer instant diversification.
What are the Select Sector SPDRs?
Unique ETFs that divide the S&P 500 into 11 index funds which focus on specific industry groups or sectors. All have associated options.
How do we establish a CEO Portfolio with $25,000.00 available?
Our goal is to achieve maximum diversification with the cash available, while still utilizing the best-performing Select Sector SPDRs and assuring a reserve cash balance to execute exit strategy opportunities, if they arise. With $25k available, a reasonable starting point would be to locate 3 securities priced in the $80s or less.
The 1-3-2024 BCI Premium Member ETF Report
Examining the CEO section (middle) of this report, there are 3 ETFs priced in the $80s or less, XLB, XLF and XLRE. Using the CEO Portfolio Setup Spreadsheet, we enter $25k and 3 securities on the top and the price-per-share on the lower half of the spreadsheet (shown below). In this case, the data resulted in an acceptable setup, with adequate cash reserve for potential exit strategy executions ($1,158.00).
The CEO Portfolio Setup Spreadsheet based on the 1-3-2024 BCI ETF Report
We are now diversified into approximately 27% of the S&P 500 (3/11) and have a cash reserve of $1158.oo for exit strategy executions, if needed.
Discussion
A CEO Portfolio with $25k cash available can be constructed using diversification and cash reserves as key components of our portfolio construction.
Author: Alan Ellman