Bank On It, JPM

If you listen to the CEO of JPM you’ll find a sense of direction affirmed throughout the company. Dimon runs that company from the top but always with concerns for the whole. It is our opinion that it is one of the best managed firms in the world.

The target on JPM is $120 within 12 months. In an effort to get some yield we are looking at selling the January $110 for roughly $4.60. That’s a max price of $114.60 just slightly under the target. Based on the current price of $99.40 that gives you a yield of 15.20% on the call if called away, plus 3.30% dividend during the year, for a total of 18.50 %. We like this approach.

On the downside the breakeven would be $94.80 and the dividends would lower that to $91.60.

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 makes NO warranties or guarantees regarding our Sensei’s selections.

 

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.

My ring doorbell will catch you.

This being said we are suggesting you sell the FEDX 140 put, that’s 10% down from the current prices. The stock has been hit and is down 40% since it’s high. I don’t know about you, but FEDX is my shipper of choice. As an AMZN prime member I’m buying more online, so FEDX is delivering more gross weight. If the weights go down then you’ll see a reason to not be in the stock.

As always consult your advisor before investing of any kind. Options are not suitable for all investors and people can and do lose money.  Investing requires risk and optionsdojo makes no warranties or guarantees from our suggestions.

Call me when you have a lower price. T

If you look at AT-T, we find the company selling at below 6 times earnings. They have not adjust their dividend, which exceeds the fed funds rate by 2.50%. So we are taking the history of AT-T to heart as well.  As many of the lines that provide both cable and phone are owned by this giant. VZ is selling aat 8 times earnings with a slightly lower dividend. We see T selling at it’s yearly low and the market trying to find a bottom. We don’t often see companies at this low EPS ratio. It is for this reason we are giving some room for this firm to rebound. The stock is currently at it’s lowest price in five years.

We are selling the December 28, 27 put. If we wind up owning the stock we are  then going to sell a leap against the position at 27 and look for a double digit return during 2019.

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 does offer any warranties or guarantees regarding our suggestions.

Bank on it! JPM

One of the best run financial institutions on the street. Let’s look at the banking situation. The interest rates are up, is that good for bad for a bank? The stock is selling at roughly 11.50% times earnings. As the lead Sensei at optionsdojo I suggest we make this one of our select stocks for the week of the 24th of December.

For our options trade we are selling the December 28, 90 puts. AS the market is oversold and it continues to try and find the bottom we want to see if the stock can come to us. The yearly low on JPM is $93.68 and as we are close to that price we are looking for support. A drop to $90 would be another 4.25% down from it’s current price. The stock is expected to earn $8.00 per share that a darn good earnings per share ratio.

If the stock is put to us, we will add it to our core holdings for 2019.

As always consult your advisor before investing of any kind. Options are not suitable for all investors and people can and do lose money. Our suggestions do not come with any warranties or guarantees of performance.

Is The Bear Growling?

Do you believe we are in a bear market? So what does that mean to your portfolio? In a bear market the equities take the brunt of the downside. In this case we see the NASDAQ down 21% from it’s high, the DOW 17%, and we may have more bleeding before it’s all over. So what is an investor to do?

It’s time to learn to use options to leverage your investment dollars. If  you own a stock the only way you make money is an increase in the price or receiving dividends. If you learn to use options you can make money when the market moves down, up, or sideways.  If you pull out of your stocks you may create a large taxable event. One way to prevent that from happening is learning to use an options hedge to protect your downside.

We believe you will benefit from becoming a member today!

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

Stock Replacement Strategy

If you have gotten out of the market and are going to try and time your reentry you may want to consider the following strategy. The stock replacement strategy is for stocks that you want to look at for a long term hold, or simply find them attractive at a much lower price. Let me give you an example. AMZN has dropped from $2000 to $1375.  That is a drop in excess of 30%. We don’t see this point as a good entry until we see some stabilization. That being said we would find it much more attractive at $1100 per share, that is another 20% drop from it’s current price.

The strategy would be to sell a put at $1100 strike price. This means that 20% down, and the premium you will receive will place you in the stock below $1100 per share. That is 45% off the high.  The beauty is that you are letting the stock come to you. If the stock is put to you, we believe it is a good price, if not you have collected the premium.   We would encourage you to buy out of the put if we have an outstanding rush to the upside. Keep an eye on our suggestions.

As always consult your financial advisor before investing of any kind. Options are not suitable for all investors, people can and do lose money. All investing involves risk, so having professional advice is key. Optionsdojo makes no warranties or guarantees regarding specific performance. Invest at your own risk.

Often we need to be told more than once.

TThe object of investing is making money. We all want to increase the values of our portfolio’s. When markets exist that scramble the basic tenants of investing you must learn to look outside the box. This is why we teach others how to use options.   Let us revisit the idea of collars.

A collar is where we buy and sell a put and a call. Now depending on your perception of the market the collar can be turned to accommodate investors needs.

An example would be (protecting your downside), you sell a call and thus receive funds. The second part of the collar involves buying a put where you spend the funds you received from the call premium.  If the stock falls the call will depreciate in value. The put will increase in value.  This type of collar can be very effective in a falling market. We encourage you to become a member of optionsdojo, so that you will know how to setup your collar.

Keep an eye out for upcoming videos and options selections in the coming weeks.

As always consult your advisor before investing of any kind. Options are not suitable for all investors and people can and do lose money. NEVER invest before consulting your professional advisor.