The market sold off hard into the close on Friday and opened down this morning before starting to regain some footing around noon. This has put a delay in adding new positions to our portfolio as we discussed last week during our Triple Play Income quarterly review session. We will watch the market closely this week and look to add at least one position when we see support build in.
Meanwhile, we have one position we can manage today.
B&G Foods (BGS): 28.50
With the market selling off the last couple of days, B&G Foods stock price has traded relatively flat at around 28.50. Some of us own stock shares at $32.50 and some much lower.
For those following our “double dip” strategy (buying stock at the same time as selling a put on BGS), we have two trades to make today. If you are just following one position, take Action 1 … selling the covered call.
ACTION 1: Sell BGS 20 May 30 call for a net credit of around 0.50.
ACTION 2: Sell BGS 20 May 27.50 put for a net credit of around 0.80.
We use the “double dip” strategy given the lower price of BGS ($30 range) as well as the fact this stock only trades monthly options. This approach gives us a chance to double up on income in the 30 days between expirations.
Heads-up: ONEOK, Inc. (OKE) announced its next ex-dividend date (4/29) several days after we sold our 20 May 70 put in early April. Our plan was to close the put for a small profit and turn around to buy the stock and collect the $0.935 dividend. After the market sell-off on Friday and again this morning, our put option is approximately $4.00 in the money. That plan is on hold for now.
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