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.

Catch this knife, no thanks.

As you can see the market is trying to find a bottom. If you jump in it’s like trying to catch a falling knife. We are looking for support and unfortunately we may not find it anytime soon. Of course we could have a Santa Claus rally, that is a jump up based on the retail sales over the holidays and the lowering of oil prices. So going out 6 months what do you expect?

I expect that optionsdojo and our staff will be doing everything we can to provide you with winners, that is option picks that we believe will make you a profit. Our philosophy is a little at a time, so we are not dragon slayers. Watch for us to use the stock replacement theory and sells puts way out of the money so that if we see continued declines we will enter a position where we feel, long term we would like to own that stock.

I would encourage you to sign up for our platform in the coming year. WE are working on some technical issues so for now enjoy our posts.

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 involves risk, we make no warranties or guarantees regarding our suggestions.

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.

The Train Will Come Eventually

This is how many investors operate. If you wait long enough the train will arrive. This is a sure way to lost a good portion of your portfolio. If a stock declines 50% it must move up 100% to get even. It is important to limit your losses. This is one of the reasons we believe you should learn to use options.

If you buy a call option your maximum loss is whatever you spent for the option. This is usually a fraction of what it would cos you to buy the stock and hold it. So if you believe a stock is going to jump due to earnings, management change, political changes, or other issues. You may want to consider using a call option to maximize your leverage. The same can be said for buy a put. If you believe the stock is going to continue to fall this may be a valid option.

For those of you that are holding and bleeding a little each day, we encourage you to learn to use options to protect your portfolio.

Options are not suitable for all investors and you should consult your investment professional before investing of any kind. Options can be risky, people can and do lose money.