Options for Week #43

In these posts we will be looking at four assets that we could sell call or put options on to create some extra income. These suggestions are just some ideas to consider. Do your own research and make your own decisions!

In the previous post we looked at Applied Materials, Apple, Cisco Systems and Exxon Mobil, CLICK HERE to read about last weeks options.

The way I select the candidates is based on multiple factors:

-Price/earnings valuation;
-Trading range and/or 52 week high/low;
-Market sentiment;
-A contrarian view.

Short calls

Whenever you sell a call option it counts as a short position, you take on the obligation to deliver shares at a certain price and preferably the stock won’t go higher than the strike so that you can keep the premium without having to deliver any shares.

Company #1: Nvidia

Nvidia has done really well in these past weeks but the short thesis for the general market and technology in particular stays intact in my opinion. We could see a very volatile swing down in the short term. The chances the stock will come back to normal levels is greater than it running up further.

Current price: $190,49
P/E: 49.83 (Forward 26.77)
52 week range: $124,46 – $247,41

Company #2: Boeing

Boeing has been in trouble for the entire year, and with serious stuff as well. The stock price has barely dented because of the news but last week on Friday we saw some serious price action to the downside. There is probably more downside to come when investors realize earnings get hit, orders get hit and the public opinion got hit.

Current price: $344,00
P/E: 40.30 (Forward 15.44)
52 week range: $292,47 – $446,01

Short puts

Whenever you sell a put option it counts as a long position, you take on the obligation to buy shares at a certain price and preferably the stock won’t go lower than the strike. This way you are able to keep the option premium without having to buy any shares.

Company #1: Cisco Systems

Although most stocks rallied and in particular the technology stocks had a good time, Cisco was left behind. Cisco might be one of the most stable technology businesses out there and it keeps getting punished for a conservative outlook from their last earnings report. I’m suspecting Cisco to make up the lost ground to its peers in the short term.

Current price: $46,71
P/E: 16.66 (Forward 13.13)
52 week range: $40,25 – $58,26

Company #2: Altria

Altria has been in rough waters for the past two years. After some volatile weeks with potential mergers that got cancelled Altria has showed its bottom. We’re up almost 10% from the bottom and the stock is still ridiculously undervalued. Due to the bottom being hit and the serious undervaluation you could make serious money with going long for the long term.

Current price: $44,33
P/E: 12.89 (Forward 9.87)
52 week range: $39,30 – $66,04

What I usually do

I usually play these kind of situations with a margin of safety of at least 10% and a medium to long term option.

Note that I’m merely pointing out some interesting names to look at. You should ALWAYS do your own research!

To find more information about options CLICK HERE.

To see my own option trades CLICK HERE.

To see the option trades I do for other people CLICK HERE.

For any questions regarding options, leave them down below in the comment section or simply hit me up on any of my social media channels!

Leave a Reply

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Next ArticleOptions for Week #44