We have two positions with Friday expirations that we can roll early this week.
Dow Inc. (DOW): 46.95
Dow was our best performing Triple Play Income position in 2021 returning 62% including dividends, premium collected, and appreciation. This year the company is lagging as revenues are off in a number of its business sectors due to global supply-chain constraints and the slowdown in Europe.
The company continues to make progress reducing debt while sticking to its core business strategies and has maintained its dividend rate. This will be a long-play position for us with modest premiums but a solid dividend that we can count on for income going forward.
Our 16 Sep 55 call will expire worthless on Friday. We can close now and add a new covered call today.
ACTION: CLOSE the 16 Sep 55 call for around 0.01. Sell to open the DOW 7 Oct 50 call for around 0.50 – 0.52 and a 1% return.
Buy to close 16 Sep 55 call
Sell to open 7 Oct 50 call
Rio Tinto Group (RIO): 56.45
RIO stock price hasn’t been able to sustain the momentum when it rallies higher recently. Iron ore prices have returned to normal levels this summer and the Covid shutdown plus slowing growth in China has limited upside revenue growth. In the face of a slowing business environment, can the company sustain its rich dividend of $6.84? Probably not but even a 15% to 20% cut in the dividend, as rumored, would still give us an annual $5.50 to $5.75 payment.
RIO is still a solid dividend play for us this year and we’ll have to trade around the lower price range for a while. Let’s roll our 16 Sep call position out again.
ACTION: Roll the RIO 16 Sep 62.50 call to the RIO 21 Oct 62.50 call for a net credit of around 0.68 to 0.72 and a 1.1% return.
Buy to close RIO 16 Sep 62.50 call
Sell to open RIO 21 Oct 62.50 call
Get notified about new articles, special events, training, and much more
Leave your info below to get more options and trading ideas to your inbox
Yes, send me news to my inbox.