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Tuesday, November 29, 2022


Stocks to Buy – Update 3

Finally a chance to get back in!

Last time we updated our list on 1/11, we were at our mid-pont of 8,650 and not to enthusiastic about the prices.  What a difference 3 weeks make as we are once again near our original entries and ready to move to March sales on what could be another nice bottom test over the next few days.  Keep in mind we were picking up these stocks following our strategy of "How To Buy A Stock For A 15-20% Discount" a buy/write strategy we have been pursuing since October, when many stocks got attractively low and the premiums to sell became attractively high.

I will point out to members that the chat section contains dozens of addtional plays each week so this is not a definitive list but these are a group of stocks that fit our criteria for solid virtual portfolio holdings that fit our core strategy, most of them are dividend payers that we don't mind owning long-term (and we NEVER write a put on a stock we don't want to own at the strike price).

On Jan 11th I said: "Several things have changed since I made my original list:  The VIX is way down so we aren't getting the same front-month premiums, the market is 10% higher and it's earnings season so every entry we take carries the additional risk of a big move up or down on earnings.  That means we need to rethink these positions very carefully if we are entering them new.  Down 10% with a 20% cushion, these stocks were no-brainers and I was emphatic making the point when the Dow was at 8,000 and the VIX was at 80 that this was possibly a once in a lifetime opportunity to pick up these great American companies at amazing discounts.  Right now, we are in the higher end of our trading range (Dow 8,650 +/- 5%) and we are expecting a small breakout on the Obama rally but that doesn't mean we expect to hold it as earnings can be very nasty."

Now I say we have a critical day ahead of us with XOM and CVX earnings on the same day as the GDP but, if we can get through this without falling below 7,500 and retake 8,000 quickly (3 days tops) then I think we are simply reaffirming a nice bottom we can continue to trade off. 

Keep in mind that our call and put writing strategy put us in these stocks 15-20% BELOW the current prices.  The cushion is fantastic in a choppy market as it lowers your need to cover with naked puts (you already have 10-15% downside protection) and it lets you ride out the dips – skipping the ulcers.  The idea is to be DIVERSIFIED, picking no more than 20% in the same sector (you can call Cramer to check your mix on Thursdays or ask me any time).   Also, do not just buy everything on this list, feel free to ask any time if now is a good time, these are just ideas so you can have a few post-its ready for when opportunity knocks! Original entry prices were from 12/1.  On January 11th, the updated picks are noted and comments are being updated and I'm putting them in alphabetical order.  We actually triggered the plays a week later on the dips so our 1/11 entries were generally way lower than the day I published but it's as good a reference point as any and gives you an idea of how even bad timing isn't so bad with this strategy:

AAPL $89, 1/11 price: $90.58, 1/30 $93.  Oh I love these guys!  Well, we made a very easy $15 with the last play, selling the conservative $85s ahead of earnings for $15.35 so I'll assume everyone is called away and we're starting from scratch.  March $90s are $12.85 so still not bad at net $80.15/85.08 and I like the new revenue stream with SIRI.  It's still AAPL and you still need a strong stomach to ride it but us believers have had the best time ever buying out callers on the dips and selling them back again on the runs up.  Leaps are still too pricey unfrortunately but you can sell naked March $85 puts for $3.20 but maybe wait and see if you get $5 on a dip.

AVP $19.78, 1/11 price: $24.21, $20.83.  We expected a test of the 50 dma but I'm surprised they failed it.  The Feb $22.50s were $4.40 and our net was $19.81/21.55.  We could lower the net by flipping to the Mach $20s at $3.65 and that's safer ahead of earnings but this is a real long-term hold to me so I would play them straight across to the March $22.50s, which still put .80 more in your pocket this month.  As a new entry, absolutely the March $20s are the way to go as thats a nice net $17.18/18.59 entry.  Leaps have improved on them too and 2011 $17.50 are $6.60 (1/2 premium) and you can sell 1/2 the Feb $20s for $1.75 as a good earnings gamble but you only have to collect .30 a month to pay off the leap!

AXP for $19.64, 1/11 price: $19.95, 1/30 $16.71.  Month one was perfect, now way off the $20s.  I like them too much to go lower so the March $17.50s (we always are talking about selling puts and calls unless otherwise specified) at $3.85 nets us in at $12.86/15.18.  The roll is a touch better than even if you are stuck with the Feb $20s but this is a great new position here.

BA for $39.88, 1/11 price: $46.17, 1/30 $40.71.  Another one that would be an even roll from our Feb $45s if you have been in the whole time (there is no hurry if you have an even roll from your sold Febs to sell Marchs – just keep tabs on it and keep a stop in mind that will trigger your sale).  Last time I said "20% is missing the bus here" so now the bus has come around again and you might want to get on.  This time, the March $40s are $5.65 so net $35.06/37.53 – about where they bottomed out in October.

BBY $19,1/11 price: $28.08, 1/30 $29.16.  We went with the spread of the 2011 $25s at $10.90 (now $10.65) and the Feb $27.50s at $2.65 (now $2.62 but still $1 in premium).  I think they are consolidating for a very nice break-out but it may take a while.  We'll just roll up to the March $30s even when we zap some more premium and I like them as a buy/write entry again (even though they went up) by selling the March $27.50s for $5.20, netting $23.96/25.73.  Earnings are not until 3/26 so probably we get nice April premiums too.

BTU $19.55, 1/11 price: $25.48, 1/30 $26.17.  We were too conservative here, selling the Feb $22.50s for $7 (now $5.10) but we can do a conservative roll to the $25s at $6.35 and knock another $1 off the basis (last was $18.48/20.49) but really no hurry here as poor GDP and poor oil profits may hit coal too and force a retest of $22.50.  Since you can get a whopping $5.85 for the June $25s, I like them as a spread against the 2011 $15s at $15.75 but that's a long-term play only for the patient.

CBS $5.83, 1/11 price: $8.40, 1/30 $6.02.  Now the dividend is 16.6%!  It will probably get cut as ad sales are way off and it was a mistake to play them by selling the March $7.50s last time at $2.75 for a net $6/$7.25 just as it is usually a mistake to play something that's already up 50%.  At this point, I'd rather hope for bad earnings (2/18) and hope for a ridiculously cheap DD but I do like the 2011 $5s at $2.15 ($1 premium), selling the June $7.50s for .57 as a patient spread. 

CEG at $23 (Berkshire had an offer in at $26.50), 1/11 price: $25.82, 1/30 $27.01.  Yawn!  What a no-brainer this was.  Too bad the party is over now and we may as well let it go unless you want to roll to the Apr $25s at $4.25, which almost makes it worth holding another 2 months but I'm sure we can do better than that with $25 tied up…  If you like safe, you can still buy it and get $4 for selling the April $25s which puts you in at $23/24 and a very nice 7.9% dividend which does not seem to be in danger.  When the deal closes, you WILL be called away and done with this one but if you can pick up $2 for 2 months while you wait this is relatively low risk.

CI $11.16, 1/11 price: $17.09, 1/30 $17.60.  We went conservative and sold the $15s so this is a new entry as those look called away (but we did have a dip that justified the caution).   Earnings are 2/5 but expectations are so low that I think it's OK to sell the March $17.50s for $3.90 for net $13.7/15.6 rather than the March $15s for $4.45, which would net $13.15/14.08 but the conservative path ahead of earnings is often the wise path!

CMI $22.50, 1/11 price: $27.94, 1/30 $25.16.  Last time I said "The Feb $25s are $6.65 – that's crazy!"  At $4.20 it is just as crazy with the stock at $25.16 and you net $20.96/ 22.98 with earnings on 2/3 – about the same net with the stock down almost $3.

DE $30.40, 1/11 price: $42.65, 1/30, $36.00.  Last time I said I want to see them test $40 before rebetting on them and they failed that just 2 days later.  Our plan of selling naked Feb $40s on this one for $5.30 (now $1) was GREAT!  My comment last update: "Almost a double off the bottom is too far, too fast for DE in a tough lending environment so I'd like to see them test $40 first.  Like TXT, you can naked sell the Feb $40s for $5.30 and put a buy in if we break $45 but otherwise wait for a chance to hopefully sell the $40 puts for $5 (now $2.65) and buy in down there."  Now that we have hit $5 for the $40 puts I don't thik I want them and I'd rather buy CAT when they finally bottom.

DRYS at $4.15, 1/11 price: $13.85, 1/30 $8.50.  Boy I nailed this one last time!  This was the only play I was nervous enough to call for a leap put on for additional protection.  We went conservative selling the $7.50s but not low enough it seems.  I just picked them today as a new play, selling the March $7.50s for $4 for a net $4.50/6 entry but if you sold the $7.50s last time, the roll to the March $7.50s gives you a buck and you've got the 2011 puts so that's fine.

GCI $8.18, 1/11 price: $8.59, $6.90.  We went with the Feb $7.50s for $2.05, net $6.54/7.02 and this is going to be just fine if they keep their 22% dividend!  New entry here is even better with March $7.50s at $1.85, which nets $5.05/6.28 and if that pays you a $1.60 dividend this year you have really got a great deal.  USA Today on-line readership is up 15% this year and they are #2 behind the NYTimes but it's the fairly reliable local paper business I like with these guys – they survived the first depression, I think they'll make it through this one!

GE $15.50, 1/11 price: $16.11, 1/30 $12.72.  After two flat months we got tagged.  Dividend is still there so I am too and we lst sold $16s for $2.75, now $3.60 and no big deal if you started from month one but from $16.11 the net is $13.36/14.68 and the roll to the March $14s or $15s is better than even so it depends how bad you feel about them now.  Since your call away price remains $13.36 less whatever add you get on the roll, I like the $15s better for $3.19 as it drops your basis to $12.92/13.98.  As a new entry, I can't think of any good reason not to sell the $11s for $2.88 for net $9.84/10.42 – an 18% discount from here and you still get the $1.28 dividend if you stick it out. 

GLW at $8.45, 1/11 price: $11.55, 1/30 $10.48.  Last time we went with a leap spread as I didn't like the huge run but a nice new entry here since you can sell the March $10s for $1.75 and net $8.73/9.37.  I do still like the Jan $7.50s at $3.55, 1/2 covered with the March $10s at $1.10 for a $3 basis on the $2.50 spread (half covered).

GNW $1.10, 1/11 price: $3.04, 1/30 $2.56.  Cool as we sold the $2.50s for $1.20 for net $1.84/2.17.  Obviously right on target and no hurry to roll but a new entry selling March $2.50s for $1.05 is net $1.51/2.01 but, as I said last time – "Don't enter this position without having money on the side to DD at $1.50 and again at $1 so you need, for example (1/11 entry math) $5,170 in cash (net $2.17, +$1.50, + $1) to buy 500 shares at $3.04 and sell the puts and calls on round one.  If you are forced to buy more, you get 500 put to you at $2.17 ave and then you buy 1,000 more at $1.50 and 2,000 more at $1 and you end up with 4,000 shares at net $1.29, not including additional calls you may sell.  This is not meant to scare you off the position but we're still in an environment where you may get a crazy sell-off and it would be GREAT to be able to scale in to this one one the way down."

Last time (1/11) I said (and it was in bold then too):  GOOG $265, now $315.  Wow, were we actaully offered GOOG at $265 and some of you guys thumbed your nose at it?  This is a tough play into earnings as they can go up or down $100 (more likely up) and there is no way we are being paid enough to take that risk.  Selling the Feb $310s for $46.50 pretty much assures that you will be called away off net $268.50/289.25 but it's a lot of cash to lay out and boy do you NOT want the stock if it's back at $289!  I would rather take the 2010 $220 calls for $120 and the 2010 $420 puts for $126.50 so that's in for $246.50 on the $200 spread.  From that we can sell those Feb $320 (neater there and we're a little bullish) puts and calls for $46 and that drops us down to just over net $200 on the $200 spread.  As long as GOOG stays in our range, we simply roll them to max premium every month and if we can roll them to $30 (conservatively) of premium 10 times over the course of the year – that's $300 collected plus the guaranteed $200 of our own spread = $500 less whatever we owe the caller or putter at that point but, as it's less than $300, we're ahead.

GOOG Update:  I love these plays!  The $310s are now $41, still with $8 in premium and the March $340s are $43, as is any other March target you choose.  This is like Russian roulette where you force your putter and caller to keep pulling the trigger – they only have to finish at the strike once and you win!  Meanwhile, the Jan $220 calls are $141.70 (up $21.70) and the Jan $420 puts are $105.15 (down $21.35) so we are neutral on the longs.  The $420 puts can be rolled up to the $450 puts for $21 and that cuts 1/4 of your premium out.  It's a little early to treat ourselves to another year but that's just about $35, first let's win a big one, although winniing just $5 in premium this month keeps us well on track.

HAR $13.25, 1/11 price: $20.51, 1/30 $17.38.  We sold Feb $20s for $44.35 and the net was $16.16/18.08 but I said at the time it was "not the safest play anymore" as we don't re-up on a stock that's up 50%.  I do still like the company long-term and I feel better about them after testing the rising 50 dma at $16 so yay to a new entry, selling the March $17.50s for $4.10 for a net $13.28/15.39 but, if you sold the $20s last time, there's nothing wrong with rolling across to the March $20s and picking up an extra $1, especially after looking at AMZNs numbers on electronics sales.  There's a very nice spread on these guys with the Jan $15s at $5.85 and the March $17.50s at $2 but plan on spending $1 to roll them to the Apr $20s if earnings are BTE on 2/9.

HOG $14.71, 1/11 price: $16, 1/30 $12.87.  We went cautious selling the Feb $15s for $3.85, net $12.15/13.58.  As I said last time: "These guys have been pretty steady but really dove from $20 last week so nice discount on the 8% dividend payer.  They may have a rough year or two or three but it's Harley Freakin' Davidson – do you really think they will no longer exist?  Just part sales alone could keep them in buisness, not to mention merchandising.."  No change in feelings here so I still like the March $15s at $4 and, as a new entry, that's $8.87/11.93 so almost a double if you are a hog fan but the sale of the $12.50s at $3.55 nets a more conservative $9.32/10.91.  There is a concern about their 10% dividend being cut but we did survive earnings!

INTC for $12.50, 1/11 price: $14.91, 1/30 $13.37.  Even roll from the $15s to the March $13s if you were in last month.  March $13s are $1.92 so net now is $11.45/12.23 so you are in at a 10-year low on a stock you can sell $1-$1.50 a month in income selling puts and calls!  Last report I said: "I am very concerned about earnings with them as it's possible PC manufacturers saved money by using up all their inventory before reordering this year" and that was pretty much the CC!

IR at $14.50, 1/11 price: $19.41. 1/30 $16.73.  I didn't like these guys last time as they had too much of a run and our plan was to roll into the March $17.50s naked for $2, which is the exact price today as they test the 50 dma at $16.37.  This is one of those stocks that is just in the wrong place at the moment.  I would rather buy them for $17.50 and sell the $17.50 calls then than enter the buy/write here but it's still valid to sell just the March $17.50 puts naked for $2, which can be rolled to June $15 puts (now $1.73) so we are talking a lot of leeway here.  

KO $44.33, 1/11 price: $44.93, 1/30 $43.55.  The Feb $42.50s at $4.90 netted $40.03/41.27 and my comment last time was: "selling the $45s just doesn't give you any real protection."  They are struggling below the 50 dma at $44.50 so maybe we'll stay conservative on the roll.  This one is a good example of how fast volatility has come down as the March $42.50s net $4.25 now but, due to the lower price of the stock, the net of a new entry is $39.30/40.90 so still nice!

KO is a great example of why you shouldn't care if you get called away.  Our orignal entries were down near $40 and they raced up to $45+ in Dec expiration and they made a nice 23% profit just letting the $42.50s go.  Then, presto, a week later, we're back in at $44.33 with a net around $39 so we take $42.50 cash off the table, wait a week and re-enter for net $3.50 less (almost 10% saved).  If KO had gone the other way – there's always the other 39 stocks on this page and the 300 or 400 others we've looked at since then!

M at $6.41, 1/11 price: $11.69, 1/30 $9.41  Brilliant call selling the Feb $10s!  At the time I said: "Another one with a huge run.  I still like them but I always have issues when something doubles on me, even if it fell to a silly price and probably still has room to run."  I like to go over these so you can get used to the mindset of this CONSERVATIVE strategy.  This one is good as a scale-in, planning to DD lower if retail tanks again as it's a nice long-term hold on a 100 year-old brand name with nice volatility to sell into but certainly riskier than some of our other blue-chip plays (but they do pay a nice 5.5% dividend if they can keep it up). The March $10s are $2.65 for net $6.76/8.38 which is a great profit if called away and a cheap entry if put to you.  BUT NOTICE THINGS AREN'T ACTULLY PUT TO US, WE JUST ROLL TO THE NEXT MONTH.

Keep in mind that the dividend we cite, like 5.5% on M above, is based on the current price.  If you drop you entry price by 10%, you effectively raise that dividend to 6%.  I've been investigating a premise that it may be a GOOD idea to jump on stocks that cancel or suspend their dividend and sell off significantly as they have a better than average chance of resuming a dividend long-term and you may get some crazy discounts but it's going to take a long time to prove out this theory and it's hard to back-test since this economic disaster is unprecedented!

MSFT for $18.65, 1/11 price: $20.52, 1/30 $17.59.  LOL, I'm just looking at what I wrote pre-earnings: "This company is a disaster.  I hate the company, I detest the management and their products are aging and falling apart and competition is nipping at their heels."  Man was that on the money!  So was my other comment: "So why are they on the list?  Well they are a money printing machine that will keep making money through sheer inertia even with a chimpanzee at the helm (and Steve Ballmer has proven that). At this price, they are accidental good dividend payers (2.9%) so my plan here is to always hedge them low and be happy to get cashed out if they run up."  Still I was not cautious enough as we took the $20s, now $2.60 for the set and I guess we should sell the March $18s this time for $2.29 which is net $15.30/16.65, that's the spike low of earnings.

NKE $48, 1/11 price: $50.46, 1/30 $45.99.  We went with the Feb $50s at $6 (now $5.15) for a net $44.60/47.23 so we are disappointed but I said at the time that the late earnings meant we would get two shots at this.  Now we need to play it safer and look at the March $45s at $7, which change the net off the last play to $43.60/44.30.  This is a great example of how you can roll and painlessly give yourself an additional 7.5% discount (in this case) whole holding on to a dividend paying stock.  Unfortunately, the dividend on NKE is not that exciting but they are getting interesting as a leap if they come back below $45 so stay tuned.  Still patiently waiting on ANF – the only other clothing play I like…

NYX $19.79, 1/11 price: $27.93, 1/30 $21.76.  We thought the $25s would be conservative enough but noooooo.  We got $6.65 for them and now $4.70 with $1.40 in premium so no reason to roll yet.  Dividend is now 5.5% so I still like the stock, and you can go in at $21.76 and pick up $5.37 for the March $20s for net $16.39/18.20 and that brings the dividend up to 6.5%!  The 2011 $15s are also very cheap at $9.88 and you can sell March $22.50s for $2.20, which is a nice spread.

PEP $53.65, 1/11 price: $53.89, 1/30 $51.68.  Same deal as Coke (and you shouldn't own both unless each is a 1/2 position).  We went conservative with Feb $50s for $6.40 net you $47.49/48.75 and, as expected they are trending down a bit but not a worry.  VIX is hurting us with March $50s just $5.25 but net $46.43/48.22 is still not bad but very close to falling off my list with just a 4% dividend.  On the other hand, PEP is one of the ones that I would advocate, rather than buying the stock for $51, take the 2011 $40 calls for $14.60 and the 2011 $70 puts for $22, which is $36.60 on a $30 spread so you are risking $6.60 of your capital.  Then just sell the same March $50s for $5.25, 3.75 of which is pure premium and roll it to whatever each month.  If you JUST capture $1 per month in profit (and the profit on the Feb $50s we last sold is already $2.60) your ROI is $24 and it is NOT POSSIBLE for your put and call spread to be worth less than $30 in 2011.  Not bad for a net $31.35 investment!  If PEP goes instantly to zero, you owe your putter $50 and your long put is $70 so loss of $11.35.  If PEP goes instantly to $100, you owe the caller $50 and your leap is $60 (assuming no premium on a buyout) and you lose $21.35 – that is the real risk of these trades until you pay off that gap so keep that in mind and stay away from companies that may do something crazy with this strategy.  This would have happened if you had this spread with WYE!

PFE $15.28, 1/11 price: $17.49, 1/30 $15.12.  Now with an 8% dividend!  We last sold the $17s for $1.95, now $2.24 so not much going on here but I think $15 is the new $17.50 for these guys after that overpayment for WYE.  The 8% dividend keeps me interested so rolling down to the March $16s at $1.85 is the way to go.  As a new entry, I'm good with selling the March $15s for $1.60 for a net $13.52/14.26 which is not a great discount but a $1.28 dividend (and they'd better not be cutting it after a 10% beat!) gives us nice additional cushion on this new Super Mega Corp. 

TEX $11.71, 1/11 price: $18.51, 1/30 $12.57.  Last time I said "This was a no-brainer infrastructure play but it's sell on the news time."  Now we are back to where we started but the chart is not too pretty.  What makes them attracive is the $3.45 you get for selling the March $12.50s which nets $9.12/10.81 but I'd sell the calls naked for $1.75 and buy the stock and sell the puts if it breaks $13 but more likely we'll see $1 less than here before they head up. 

TIE at $7.28, 1/11 price: $9.39, 1/30 $7.39.  Last time I said wait  and even if you missed our entry last week $7.39 is still a great entry.  Selling March $7.50s for $1.78 nets $5.61/6.56 and that's just fine.

That's another point about the buy/write plays – when you are between two strikes, you often don't get the best premium so it's better to wait.  Even if it gets higher, that only serves to add premium to the putter and caller at the higher strike so with TIE above, our logic on 1/11 was to wait to be sure they broke $10 and THEN sell the $10 puts and calls than risk it right then, since I felt short-term worried about them.  The premium paid for the $7.50 puts and calls was just .75, nowhere near enough discount for me to get excited about.  So if some plays are offering you 15-20% discounts, even if put to you – there's no reason to go with ones that offer 10%.  Having that 5% discipline every month is a free way to do 60% better over the year.

TXN at $14.15, 1/11 price: $15.86, 1/30 $14.95.  My last comment: "I think they are rangebound between $14 and $16 unless the SOX break out and the puts and calls don't pay enough to cover the risk so this one is a victim of the lower VIX and off the list."  Now that they are back at $14.95 and proving my range, I like the March $15s at $2 for a $12.95/13.98 entry.

TXT $13.90, 1/11 price: $15.87, 1/30 $9.09.  Damn, this one is our worst performer now.  I still like them long term but our last play left us with Feb $15s and a net $12.37/13.69 so let's deal with that.  $15s are now $6 and you can take the assignment and sell the June $12.50s for $5.45 for a net $8.24/10.37 entry – not so bad unless you don't want the possibility of having to buy another round.  If you really don't want them you can roll the current $15s to the Jan $10s, which are also $6 but your net (if you came in late off $15.87 on Jan 11) is still $12.37 but you lower the put strike to $11.18 so really not worth it unless you absolutely don't want to risk owning more and you just want to buy some time.

XLF at $10.55, 1/11 price: $12.45, 1/30 $9.92.  People forget that XLF pays a 6.6% dividend too, which is nice,  Our last sale was the $12.50s, now $3.10.  The March $10s are $2.30 and if you were in from the beginning it's still best to roll down.  As a new play I'd sell the $9s for $2.32 so that's net $7.60/8.30.

UNH $20.12, 1/11 price: $26.30, 1/30 $28.69.  HOLY COW, A STOCK THAT WENT UP EACH TIME!   Last time we went for the 2010 $20s at $9.90 (now $11.40), selling the Feb $26s for $2.45 (now $3.15).  To be fair, I did say: "We expect a sell-off ahead of 1/22 earnings and that would be fine as we'd love to roll down to the 2010 $15s for $2.50 or less.  That would put us in the $15s for net $9.95 and they are currently $13.40.  If UNH goes higher, we have the 200 dma as a good spot to roll our caller up or just add more to our long position (scaling in) as we would be well covered with the $26s.And that is EXACTLY what happened.  Now it's a no-trade on a new entry until we get a retest at $27 or a breakout over $30 (retest far more likely). 

UYG at $4.34, 1/11 price: $5.86, 1/30 $3.40.  As I said last time: "This is XLFs hyperactive little brother."  UYG pays a 7% dividend too!  Of course, many banks may suspend dividends this year but we're talking about long-term holds, not trades and with banking getting back to a dull business, dividends should also make a comeback over time.  We last sold the $5s, now $1.80 and that can be rolled to March $5s for $2.16 if you are a believer.  As a new entry, there's nothing wrong with selling the March $3s for $1.35 to bring you down to net $2.05/2.53, which is better than you would do naked selling the puts alone and a 50% gain if called away.

VLO $16.23, 1/11 price: $23.68, 1/30 $24.69.  We went with the 2011 $15s at $11.60 ($3 premium) and sold the Feb $25s at $2.29.  They were much better behaved than I expected and now we have a rising 50 dma to protect us so we can do a buy/write here, selling the March $25s for $4.55 for a net $20.08/22.54, which is pretty much down to the 50 dma.

WMT $53, 1/11 price: $51.58, 1/30 $47.86.  We went with the Feb $50 puts and calls at $5.40, net $46.18/48.09.  Any sell-off in WMT is silly so I'm loving the new entry, selling the FEB $47.50s for $3.40, which nets $44.46/45.98.  If you sold the Feb $50s, earnings are the 17th so we'll have to keep an eye on them but I expect that's the right price.  The leaps got cheap and I love the 2011 $30s at $20 as a buy and forget until they hit $55 again, then we can sell something.

X at $25.40, 1/11 price: $40.14, 1/30 $32.89.  Another good one!  My 1/11 comment was: "I'm too nervous to write the Feb $40s against it after such a good run but you can get $10.50 for selling the $35s and that nets $29.64/32.32, which is enough of a discount to make the risk worthwhile on a scaled entry."  We are righ on the money with this one and now we are absorbing the bad news.  Dividend is now 3.8%, p/e is 5 and I doubt the government would let them go BK.  There were $190 in June so not my favorite but selling March $35s for $8 (yes $8!) nets $24.89/29.95 and now that we are past earnings I don't mind being more aggressive.  The March $30s also fetch $8 for the same $24.89 but only $27.45 if put to you, which is 16.5% off.  

Think about what we are buying here, Boeing, American Express, Intel, Microsoft, Texas Instruments, Macys, US Steel, Corning, Johen Deere, Pfizer, GE, Coke, Pepsi, Nike, Avon, CBS, Gannett, Harley Davidson, Apple, Best Buy, Wal-Mart…  Even in a depression, can you imagine life without those things?  That's the idea of bottom fishing in a tragic market – take advantage of the opportunity to buy the top brands at bottom prices.  You can always gamble on the up and comers but this is a very rare opportunity to get the best companies on sale.

Happy hunting!


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 Not sure of the date, but I think you also had KMP somewhere in the low $40s and USB, somewhere around $24. Anyway, I entered them.
KMP is real winner, now at $48.50; nice dividend and the stock is very volatile, so there have been some nice dips to sell puts into.
USB was a real winner (hit $29) but it’s retreated… happy with entry anyway. Ready to sit back and watch dividends roll in. Only worry is earnings scaring people off but c’mon, we all know bank earnings in 2009 are going to suck. If other investors don’t and panic sell, I’ll be happy to pick up some more on dips.

Monster post Phil.  Can’t wai to dig in!  Thank you!

Thanks for this writeup/update Phil!
BTW, you do put in some pretty awesome/amusing pictures throughout your posts.  I’ve always wondered where you get them from or do you make some of them up yourself?  (like the google money making machine pic)

What about TIE these days?

Thanks Phil, I know it takes effort but this is very useful, almost makes up for the portfolios 🙂  You know what I mean.  Thanks!

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