What’s your outlook?

If you are positive you can look at buying long term calls, also known as LEAPS. These are options that expire at least a year later. The other option, no pun intended is to be cautious and sell a put that is 10-15% below the current price.

Our idea today is to sell a Jan 17,20 PUT, the premium is roughly $13.50.  That gives you a basis of $106.50 if the stock is put to you.  based on having to have $12,000 available in case the stock is put to you the annual return of $13.50 is 11.25% yield. All this is assuming that the stock is never PUT to you. 

As always, consult your advisor before investing of any kind. Options are not suitable for all investors and people can and do lose money. optionsdojo gives no warranties or guarantees regarding our opinions. Invest at your own risk.

Read The T leaves

Over a long period of time companies that pay dividends and investors that use those dividends to buy additional shares have done well.  It is for this reason that we are looking at AT-T.  The stock has pulled back from the low 30’s to the $28.50 range. The dividend yield is roughly 7.25% based on the current price. (keep in mind that dividends are NOT guaranteed).  The company has a fair amount of debt but we believe this dividend will stay above the 5.50% during the year.

You may be asking that is lower then the current dividend. That would be a good observation. This happens when the price goes up and thus the dividend yield would go down. So that being said, look to sell the January 4, 28 puts. This gives you a little room as well as if the stock is put to you, we would look to sell covered calls out of the money during the year.

The dividend paying stocks give up some downside protection, as in the dividend will lower our cost basis as we receive the cash. If you chose to reinvest you’ll increase your overall investment and if the stock has pulled back some more you’ll increase the yield on your new shares.

As always consult your financial advisor before investing of any kind. Investing in stock and options requires risk and IS NOT SUITABLE for all investors. You have a variety of issues to consider before making any investment. Our opinions give no warranties or guarantees of specific performance, invest at your own risk.

As we trade this Friday morning 1/4/19 T is trading at 30.16 per share. 

Are you spending? Are you buying that latte?

The market can be a very emotional ride. If you are not looking at your surroundings to determine what is working, you are missing a sign. The government shutdown will not put us in recession. What are the stimulants? The price of oil is a clear sign. We don’t see inflation in the oil prices, in fact we have seen the price of fuel come down. That is a plus for most truckers, airlines,federal express and many more.

The suggestion here is to dollar cost average over the coming months. If you like a stock like AAPL, GOOG, AMZN, FB, you can sell puts 10-15% off the current price and let the stock come to you. We are using weekly options based on the current market conditions. Give yourself enough room to make a profit.

As always consult your advisor before investing of any kind. Options are not suitable for all investors and people can and do lose money.