This market has been relentless the last few weeks selling off across most sectors … on almost very little news. Starting this week, we are likely to get real news … the latest CPI number coming up later this Thursday and another Fed meeting and expected rate hike next week. Either one could send the market lower or on a bear market rally. 

We will stay conservative and add calls where we can and roll positions out when we have opportunities. Let’s roll a few of our stronger positions today and add a covered call to one of our uncovered positions.

COVERED CALL

AbbVie (ABBV):  142.00

Healthcare stocks have been a safe haven for many investors lately. The drug company stocks have not kept pace with pure healthcare plays but they are still holding up relative to the overall market.

AbbVie goes ex-dividend on Thursday (10/13) paying a rich 1.41. We can sell a covered call far enough out of the money today to avoid assignment later this week.

ACTION:  Sell to open ABBV 28 Oct 149 call for around net credit of around 0.95 to 1.00 and a .7% return

TRADE ROLL

Cardinal Health (CAH):  69.90

As mentioned before, healthcare stocks have been a defensive play for investors during this market sell-off. We can see it in Cardinal Health stock price which is up over 30% since the first of July. Our 14 Oct 70 call is in the money. Let’s roll it out another 2 weeks for good credit.

ACTION: Roll the CAH 14 Oct 70 call to the 28 Oct 70 call for a net credit of around 0.90 to 0.95 and a 1.3% return

Buy to close CAH 14 Oct 70 call

Sell to open CAH 28 Oct 70 call

TRADE ROLL

Gilead Sciences (GILD):  65.41

Same story with Gilead as Cardinal Health … healthcare stocks are one of the few defensive sectors in a falling market. We can roll our call out two weeks.

ACTION:  Roll the GILD 14 Oct 65 call to the 28 Oct 65 call for a net credit of around 0.90 to 0.95 and a 1.4% return

Buy to close the GILD 14 Oct 65 call

Sell to open the GILD 28 Oct 65 call

TRADE ROLL

Vale S.A. (VALE):  14.04

Vale S.A. is a mining company extracting and selling iron ore which has been in demand for the last year. Even though it is a commodity stock with a high degree of volatility, the company has a forward P/E of around 3.8 and is considered a great value play at this price.

The stock price doubled in 3 months hitting a high last April, sold off through the summer, stabilized over the last month and has started to climb higher. Let’s roll our calls out and up several weeks.

ACTION:  Roll the VALE 14 Oct 14.50 call to the VALE 28 Oct 15 call for a net credit of around 0.14 to 0.15 and a 1% return