Option Ideas 8/17/20


  • Cash-secured puts and covered call ideas.
  • Some opportunistic hedges.
  • Screening for ideas.
Options Cycle

Each Monday I put out lists of covered calls and cash-secured puts using screens at BarCharts. I am screening for VSL stocks, as well as, an expanded universe of stocks that used to be on the VSL. Stocks no longer on the VSL should have covered calls written near the money in hopes of getting called away or at least getting a higher premium. Stocks currently on the VSL can be written a bit out of the money to allow for more appreciation, the offset is lower premium.

I am arranging alphabetically, but you can sort how you want.

Stocks Covered Call Ideas

This week I focused on calls 60-100 days out to get us through the election. 


Stocks Cash Secured Put Ideas

I also focused on 60-100 days out with cash secured puts as well. Look to get good prices with GTC orders on your favorite stocks. 


ETF Cash Secured Put Ideas

I focused on 60-100 days out and 5-25% out of the money planning for a correction.


Cash Secured Put Selling Basics

Stick with selling puts when stocks or ETFs are oversold on a daily or weekly basis, i.e. RSI below 40 and rising, or RSI below 30.

Covered Call Selling Basics

Stick with selling covered calls when stocks or ETFs are overbought on a daily or weekly basis, i.e. RSI above 60 and rising, or above 70. In the case of dividend stocks, try to time covered call expirations to shortly after x-dividend dates.

Stock Rover Oversold & Overbought Stocks

The first list is to measure momentum.


The second list is measuring valuations.


Stand Out Ideas

In looking at the valuations, it should be clear that almost nothing is fairly valued. Compare Forward PEG to revenue growth and Greenblatt earnings yield. What you’ll find is that there are only a handful of companies priced for the next year or two’s earnings. In addition, there are almost no stocks with RSI under even 40 at this point. So, we have an overvalued market that is running out of new momentum to create since most stocks have already joined in (even thought the biggest gains are in about 65 stocks.

  • PTC (PTC) has a forward PEG of 1.1 and RSI around 60 signaling some upside left, but the end of the run in closing in. I’d be looking for a pullback to sell puts.
  • Broadcom (AVGO) has a forward PEG of 1.1 and RSI around 60 signaling some upside left, but the end of the run in closing in. I’d be looking to buy AVGO outright on a pullback if I’m a dividend investor.
  • Berkshire Hathaway (BRK.B) is interesting to me as I have discussed due to the changeover in the portfolio, now adding Barrick Gold (GOLD). They are also buying their own shares back and looking to buy other companies on a correction. Berkshire compares favorably to banks. So, like Apple (AAPL) which I recommended a year ago, use Berkshire as a substituted for bank stocks. Nobody should own American bank stocks in my opinion. There are better balance sheets and better businesses with less risk to mimic that space. If you have the ability to sell Berkshire puts, look at the December $200 and try to get as close to $20 as possible to get a net price of $180. Otherwise, look to buy in the $180s or lower.
  • Great Lakes Dredge & Dock (GLDD) is showing a 13% Greenblatt earnings yield that exceeds its standard earnings yield, this means a cleaner accounting approach. The stock is up recently, but not a lot. I’d be selling September $9 and $10 puts to try to get this one ahead of the election as a Biden win could send this one up.
  • Several stocks are bid up from the “Rebound” portfolio, including Caesars Entertainment (CZR) and Disney (DIS). Wait for pullbacks on such stocks as the stock market rebound is about a year, or maybe two, ahead of the economic rebound. I believe the narrative was a return to normal late this year, when that doesn’t hold, we’ll get another chance to buy.
  • Almost everything is a covered call candidate. I think writing December and January covered calls are great ideas to capture premium and build in some safety.

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