We have two more positions with expirations this Friday we can manage today.
Cardinal Health (CAH): 66.72
Cardinal Health stock has been trading on a nice upward trajectory based on its strong business model and the settling some of its legal issues from 2021. Even with the market sell-off on Tuesday, the stock price is still holding.
CAH goes ex-dividend a week from tomorrow (9/30) making it challenging to roll our 16 Sep 70 put out and let alone down in one week for a net credit. I’m going to recommend something we usually don’t do in Triple Play Income … which is give a little cash back.
ACTION: Roll the CAH 16 Sep 70 put down to the CAH 23 Sep 69 put for a net DEBIT of around -0.70 to -0.75. Yes, debit.
Buy to close CAH 16 Sep 70 put
Sell to open CAH 23 Sep 69 put
Here is the reasoning: We give back 0.75 but we collect a 1.00 of capital gains lowering our potential entry price into the stock at $69. And we at least clear 0.25 of premium to strike difference to our favor.
CAH could rally next week to $69 and if it does, we can either take assignment or let the put expire worthless and buy the stock the following week. Its more than likely that it will not rally to 69 unless there is a melt-up in the market next week.
Either way, we enter the stock ahead of the ex-div date with a $69 entry price.
ONEOK, Inc. (OKE): 62.97
ONEOK stock has been trading in a range from 60 to 65 reflecting the volatility in the natural gas marketplace. We continue to like this position heading into the winter when natural gas prices are likely to rise.
We have 2 call positions in OKE … the 16 Sep 60 call and the 16 Sep 65 call. We will have to roll the 60 call out strike to strike to avoid paying a debit but we can roll the 65 call higher and collect a good credit.
ACTION 1: Roll the OKE 16 Sep 60 call to the 21 Oct 60 call for a net credit of around 1.55 to 1.60 and a 2.5% return
Buy to close OKE 16 Sep 60 call
Sell to open OKE 21 Oct 60 call
ACTION 2: Roll the OKE 16 Sep 65 call to the 21 Oct 65 call for a net credit of around 0.75 to .80 and a 1.2% return
Buy to close OKE 16 Sep 65 call
Sell to open OKE 21 Oct 67.50 call
OKE trades only monthlies so you may have to work the order to get filled.
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