Markets continue to sell off again today after a brief rally post the Fed rate hike announcement yesterday. At this time, we are only managing positions where we can make the necessary roll or adjustment until this market settles more (IBM and CF earlier this week).
Most of our Triple Play Income positions are in stocks that are relatively low beta and a reasonable valuation. It doesn’t mean they are immune to bear market pressures as most of the stocks in this market are down. However, building up our cash from both premiums we collect and dividends we earn, helps to off-set the drop in share price.
At this time, we would expect to see most of our 17 Jun covered call positions to expire worthless tomorrow rather than try to roll them in the middle of this downdraft. That may change depending on what happens the rest of today and how stocks open and trade tomorrow morning.
For now, there is only one position we can manage today.
B&G Foods (BGS): 22.11
For those of you who are “double dipping” on B&G Foods (selling puts and owning the stock to sell calls), we have run out of room to roll our 27.50 put out for a credit. Despite being a company that benefited from food supply chain shortages in 2020 and 2021, BGS stock has sold off along with the market since the 1st quarter. The only choice at this time is to take assignment of the stock and we will manage with calls when the direction changes.
If you own the stock, no action at this time. We will wait until we get back into an uptrend with the stock price.
ACTION: No Action. If you are “double dipping” BGS, take assignment of BGS stock this weekend.
Rio Tinto Group (RIO): 67.95
Iron ore prices remain high even as demand has softened and Rio Tinto has just started delivering ore from its Gudai-Darri iron mine in Western Austrailia…making it Rio’s first new opened mine in over a decade. The company has managed to navigate this unusual business environment between Covid, lockdowns in China and a potential worldwide recession.
We have earned over 14% income on RIO from premium we’ve collected and the rich dividend we picked up in March. Let’s roll our monthly call option down slightly to next month – less premium but protection in case we get a sudden rebound in the stock price.
ACTION: Roll the RIO 17 Jun 75 call to the Rio 15 Jul 74.38 call for a net credit of around 0.85 to 0.90 and a 1.2% return
Buy to close RIO 17 Jun 75 call
Sell to open RIO 15 Jul 74.38 call
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