Retirement Income Options – Time To Taper

Summary

  • The Federal Reserve is set to announce its taper. And, so is the U.S. Treasury.
  • A reduction in liquidity and strengthening of the dollar has a near 100% correlation to a stock market correction.
  • A classic 3 or 5 waves down correction could develop, which gives option sellers a great opportunity to generate income while waiting things out.

Retirement Income Options focuses on our Plug & Play lists. Make sure to read:

If you have other stocks or ETFs that you have a question about, i.e. looking covered call or cash-secured put opportunities, please ask a question in the comments and I will post an answer and/or include in next week’s article.

Except where noted, trade ideas refer to normal 3rd Friday expirations.

c = covered call p = cash-secured put 

Covered calls are based on you already own the underlying and it having grown to a full position or greater, NOT a buy-write. We write covered calls on a portion of our position, not the whole, so that our winners can still run.

Conviction Trades

My conviction trades are those I am trying to make this week and execution can depend on price movements. These ideas are based upon the buy zones and oversold or overbought signals. 

===============================================

Covered Call Ideas

Opendoor (OPEN) if you bought in the middle teens as I suggested and the position has grown, then selling a $30 December call allows you to take about a dollar of profit off the table and allow the stock to run to $30 if this rally continues short-term. If you only have a starter position, don’t bother, look to buy the next dip. The developing market for Opendoor where there are fewer cash buyers and tougher credit is going to be very good for them. 

Sell $30 December calls for $1+.

SunPower (SPWR) whether you bought in single digits or in the lower $20s with us, the stock is running and is almost overbought on the weekly charts. This is a position that is complimentary to a clean energy ETF, so, it should not be a huge position. 

Sell $40 January calls for $2+.

Nutrien (NTRThis option is still in play. Go ahead and sell it. NTR has had a great run and recently broke out. The spike the past month or so is overdoing it. Stock likely pulls back to $60ish. BHP (BHP) is inching into potash and that’s important. Is a good time to almost double your dividend income with a covered call in my opinion. Trim it too if you have it.

  • Sell $75 December covered call for ASK.

Travel America (TAis still a great long-term stock, but it’s ahead of itself. I do love this business model, but it’s not asset light and credit is getting tighter. Time to create some income from this one as it might enter a lull. Trim it too if you have it.

  • Sell $55 December covered calls for ASK.

AMD (AMD) is just barely coming off of overbought on the weekly and slightly overvalued on forward looking normalized cyclical earnings. Pretty easy to see this one settling back on more coming competition and margin contraction in the next year. Could have a puff of the cigar left, but if you’re risk averse, at least sell covered calls against a portion of the position. Remember, markets are always adjusting, so is the semiconductor market, it’ll just take some time.

  • Sell $130 January calls at the ASK.

Cash-secured Put Ideas

Ford (F) is still one of my favorite stocks even though it’s a bit overbought on the weekly. Thing to remember, this is the first leg up in what is likely multiple legs up. A couple analysts are suggesting a pullback. That’s cool, I want more.

  • Sell $15 January puts for $1+

Cazoo (CZOO) just keeps growing. It’s going to do a Carvana (CVNA) Euro style (so probably half as good, but that’s still great). You really want to own this. If you own some, sell cash-secured puts. If you don’t buy a starter and sell cash-secured puts.

  • Sell $9 January puts for $1+

Fast Acquisition (FST) is moving fast in a fast moving online gaming world. Their deal with DraftKings (DKNG) is a big deal and hints at more M&A as companies like MGM (MGM) have sold off their real estate. Please own this stock!

  • Sell January $12.50 cash-secured puts for $1.50+

Bristol Myers (BMY) for all you dividend investors Bristol Myers is screaming sell a put to collect your premiums (which is more than a dividend). The top of the buy zone is $54 so that’s your bogey for first assignment next price after premiums. BMY is starting to base, so I’m comfortable getting started with a cash-secured put. If it falls below $54 then either sell another put or add some stock.

  • Sell January $55 puts for $1+

AT&T (T) I know you still hate this downward drifter too. But, me and shooter both see $23-24 as an absolute bottom area. Plus, some big fish are clearly accumulating shares from the weak “dey took me divident” crowd. I think AT&T is underpriced by around $130 billion. It’s market cap is down to $181 billion. It’s roughly a double from here. You really can’t ask for much more margin of safety intermediate term.

  • Sell January $25 cash-secured put for $1+ 

Discovery (DISCA) is undervalued by about half as well in my opinion. The coming deal with Warner will make it the biggest content provider on the planet and it will have the broadest international reach. I see a very Netflix (NFLX) type ride with this one someday.

  • Sell January $22.50 cash-secured puts for $1+

ViacomCBS (VIAC) keeps moving in the right direction on streaming revs and I can’t imagine them not doing a strategic deal (something with Comcast (CMCSA) with NBC seems inevitable to me). If you are a dividend investor, you should be moving towards having a full 4% position here.

  • Sell January $37.50 cash-secured puts for $2.50+

WeWork (WE) is a real thing. Really. People still work in offices. And, as I discussed months ago, they are moving to be more and more enterprise customer based. WeWork is simply undervalued with projected growth. If the world approaches normal the next couple years and corps stick with spread-out workforces, then this is a double or triple fairly fast.

  • Sell $10 December put for $1.75+

Jumia (JMIA) is attractive again. It’s really building a base and it has massive upside someday. I really like selling puts on this over and over until a starter position becomes a half position. That’s all I’ll want though as I still intend to buy an emerging markets fund eventually.

  • Sell $17 January puts for $2+

Ontrack (OTRK) I know you hate it. Get over it. They’re priced for Armageddon and have government contracts. They ain’t going nowhere. When a company is priced for Armageddon ask one question: will it be here in five years. If the answer is yes, buy it. Technical indicators s started moving in the right direction the past month.

  • Sell January $7.50 cash-secured puts for 75¢+

Stone Co (STNE) Berkshire is a heavy investor in this Brazilian fintech. Early mover advantage, back to near IPO prices. Stone Co reminds me of Square (SQ). Somebody bought a bunch late last week. Potential triple or better from here. Take a starter position (I already have one) and…

  • Sell $37 January cash-secured puts for $3+

Palantir (PLTR) is still a bit hard to decipher, but they keep making deals for their AI and analytics services with governments and big business. It’s hard to see this one not beating the markets over time, the only question is can it be a multi-bagger from here. I suspect yes as it is consolidating much like MP Materials while it builds. I’m hoping it dips on earnings.

  • Sell December $25 cash-secured puts for $2.50+

Ginko Bioworks (DNA) Raised strike price from $10 to $11 because there’s a lot of interest in this biotech platform company. I tried to put you on a while back. If you waited, you should get a chance to buy this platform genetic research company soon, or at least sell a cash-secured put.

  • Sell January $11 cash-secured put for $2+

Heron Therapeutics (HRTX) continues to expand its indications for its anti-opiate solution. Again, this company has strong smart hands involved as investors. Learn what ZYNRELEF is. Remember, Purdue Pharma and oxycodone? That’s what they’re target market is. These guys could become that big without selling opiates.

  • Sell $11 December $10 cash-secured puts for $1+

Aemetis (AMTX) is a big winner with higher energy prices and clean energy regs continuing to get tighter. They had a bit of profit taking late last week. I am trying to sell more puts as I only have had a small taste of this on so far. The more I learn, the more I like. I want to own shares on pullbacks. The November’s got executed last week for me, you can try to sell those as well if you like, per chart below. Mind your asset allocation.

  • Sell $17.50 January cash-secured puts for $2.50+

Sirius XM (SIRI) continues to build a global case. I really like selling puts here along with a position in Liberty Sirius (LSXMK) which is a significant Berkshire holding as well. Their subscription revenue potential is huge now that they are global via streaming vs just satellite U.S.

  • Sell $6 January cash-secured puts for .50+

Getting Close To Selling Cash-secured Puts

Intel (INTC

Rio Tinto (RIO)

Pfizer (PFE)

Comcast (CMCSA)

BHP (BHP)

Disclosure: I/we have a beneficial long position in the shares of T, F either through stock ownership, options, or other derivatives.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: I have sold several of these, see recent holdings and articles.