Dear Triple Play Income Member,

Let’s manage another one of our positions today

B&G Foods (BGS): 25.84

We’ve had a position in B&G Foods ever since we launched Triple Play Income in the fall of 2020. The stock was trading around $20 then and we rode the growth up to the $30 range where BGS has traded between $30 and $34 for over a year.

Lately, food and beverage stocks, in general, have been trading lower on the prospect that higher commodity prices will hit their profitability and consumers may react by cutting back on certain brands. Food stocks like B&G Foods are more defensive and haven’t been hit as hard due to their lower exposure to commodity inflation.

Still, BGS stock price has had a rough couple of weeks trading down to the $25 range. Our “double-dipping” strategy (selling puts and calls) has increased our cash collection but one side of that trade we need to defend. Our 18 Mar 32.50 put is in the money and we’ll need to roll it. Our 32.50 call option will expire worthless.

The company management has maintained the 1.90 dividend for a 7% annual yield and BGS goes ex-dividend on March 30th. Carrying only monthly options makes it harder to adjust the positions for richer premiums but we can still collect more cash by rolling our put option out to April.

ACTION 1 (Double-Dip): Allow the BGS 18 Mar 32.50 call to expire worthless. Let’s stay in the stock for now to collect the dividend and we can sell another call if we get a bounce in the stock price.

ACTION 2 (Double-Dip): Roll the BGS 18 Mar 32.50 put to the 14 Apr 32.50 Put for around 0.55 to 0.60 and a 1.6% return.

Buy to close BGS 18 Mar 32.50 put

Sell to open BGS 14 Apr 32.50 put

With monthly options premiums, we couldn’t roll our 32.50 put down at strike in April without paying a debit. However, if BGS stock price gets a lift in the next 30 days we can continue to roll this put out for more cash.

David Durham

Triple Play Income