The stock market has been trading in a flat range for the past month and a half. Anticipation is building that something is going to change the direction up or down… another Fed rate hike… more bank failures… a U.S. debt default… a recession.
That fear of the next big event isn’t really showing up in the market, though. The fear gauge itself, the VIX, is trading around 17, which means lower premiums for option sellers across a broad range of stocks.
And now that we are past earnings season, premiums on our Perpetual Income stocks are generally lower. We can manage a few of our positions today but note that we may be sitting in some of our stocks uncovered for a few weeks.
Camping World (CWH): 25.25
Camping World rallied this week, and our call is in the money. Let’s roll it out two weeks strike to strike for a solid credit.
ACTION: Roll CWH 12 May 24 call to the CWH 26 May 24 call for a net credit of around 0.40 to 0.42.
Buy to close CWH 12 May 24 call
Sell to open CWH 26 May 24 call
Dow Inc. (DOW): 52.51
Let’s roll our Dow covered call out two weeks and down for a credit.
ACTION: Roll DOW 12 May 56 call to the DOW 26 May 54 call for a net credit of around 0.41 to 0.45.
Buy to close the DOW 12 May 56 call
Sell to open the DOW 26 May 54 call
Williams Companies (WMB): 29.21
We’ve been looking to exit Williams Companies, but our calls have been finishing out of the money. Let’s roll out another two weeks at the same strike for a small credit.
ACTION: Roll WMB 12 May 30 call to the WMB 26 May 30 call for a net credit of around 0.20 to 0.24.
Buy to close WMB 12 May 30 call
Sell to open WMB 26 May 30 call
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