Ok. Let’s get back into managing several of our positions today as well as adding a new covered call to Blackstone (BX).
Blackstone (BX): 92.76
Blackstone stock has traded higher after an earnings report that beat consensus estimates but was well down from a year ago. The company continues to outperform many of its competitors in this tough real estate and asset management climate, but the stock has been stuck in the 85 to 95 trading range since the beginning of summer.
The bigger disappointment but not a surprise coming out of the earnings report was Blackstone is cutting its dividend by 29% from $1.27 down to $0.90 per share. This is not the first time Blackstone has cut its dividend in the last 5 years. If conditions change, earnings improve then they are as likely to boost the dividend rate again.
For now, we still like the stock as a Triple Play Income position. Blackstone has an Implied Volatility rank of 51% which gives us plenty of premium to trade around. Let’s sell a covered call today.
ACTION: Sell to open BX 11 Nov 101 call for a net credit of around 0.90 to 0.92 and a .9% return
Dow Inc. (DOW): 48.31
Dow Inc. earnings report of 1.11 EPS missed by 0.04 while revenues of 14.1B beat by 1.09B. Overall the report was good news/bad news: Gains in performance materials and coatings but a decline in Industrial & Infrastructure packaging/specialty plastics.
Despite the weaker report, the stock price is holding up under tough economic conditions and Dow continues to make progress reducing debt on its balance sheets. We expect the stock to continue to trade in the 47 to 50 range. Let’s roll our calls up and out to collect a reasonable premium.
ACTION: Roll the DOW 28 Oct 49 call to the 11 Nov 50 call for a net credit of around 0.40 to 0.45 and a .8% return
Buy to close DOW 28 Oct 49 call
Sell to open DOW 11 Nov 50 call
Vale S.A (VALE): 13.75
This mining company saw it sales fall short hit by a decline in iron ore and copper prices this summer. The stock has been trading in the 12 to 14 range since the last quarter. Vale reports earnings this Thursday (10/27). Let’s get ahead of it and roll our call out
ACTION: Roll VALE 28 Oct 15 call to the 11 Nov 15.50 call for a net credit of around 0.15 and a 1% return.
Buy to close VALE 28 Oct 15 call
Sell to open VALE 11 Nov 15.50 call
Williams Companies Inc. (WMB): 32.24
Williams has received several downgrades over the last month due to expected slower growth in earnings. However, the stock price is holding in the 32/33 range for now as we head into the colder winter season where natural gas prices tend to rise.
Williams reports earnings Monday (10/31) … whether they beat or miss, let’s roll our call out today to collect more cash. If the stock pops and we get called away, we can jump back in selling puts.
ACTION: Roll the WMB 28 Oct 32 call to the 4 Nov 32 call for a net credit of around 0.38 to 0.35 to 0.37 and a 1.1% return
Buy to close the WMB 28 Oct 32 call
Sell to open the WMB 4 Nov 32 call
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