We were called out of DOW and VALE stock positions over this past weekend. Let’s get back into those positions selling puts.
Dow Inc. (DOW): 57.62
Dow recently picked up several analyst upgrades and the stock price has recovered since its October lows trading higher this week. With China re-opening and signs that the company has continued to pare down its debt from the Dupont spin-off, we want to get back into trading DOW in 2023.
Earnings come out next Thursday (1/26) and there could be short term shock to the stock (down or up). Let’s sell the February monthly put to sidestep the earnings report while still collecting a solid credit.
ACTION: Sell to open DOW 17 Feb 55 put for a net credit of around 0.85 to 0.90 and a 1.6% return.
Vale S.A. (VALE): 18.27
Vale is in an interesting situation as steel production in Europe has slowed considerably while North and South American demand is up. Price increases in iron ore is also working in Vale’s favor.
We originally thought that VALE might be on 6-to-9-month short-term inflation play but it looks there is support to trade this stock for income through the first half of 2023. The dividend is the key component. Vale pays a semi-annual dividend and there have been warnings of a dividend cut coming but management indicates they will distribute dividends again sometime in the first quarter of 2023.
Let’s get back into Vale selling a put option.
ACTION: Sell to open VALE 3 Feb 17.50 put for a net credit of around 0.25 and a 1.3% return.
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