Let’s continue to manage a few more of our Triple Play Income positions today.
Kraft Heinz Co. (KHC): 38.43
The question asked about Kraft Heinz stock is it still an undervalued play in an over-hyped food supply chain market? The company is playing a lot of financial catch-up since missteps in 2018-2019 that Wall Street and investors have yet to recognize and reward with a higher share price.
On the positive side, company earnings are increasing which is helping to drive down debt levels producing a relatively strong free cash flow. After cutting their dividend early in 2021 the company has re-committed to getting back on the dividend growth track in the coming years.
Meanwhile the stock price has held its own over the last 3 months compared to other food supply chain competitors.
Consumer staple stocks and KHC is still a good place to collect premium and dividends in our Triple Play Income portfolio. Our 25 Mar 40.50 call is worth a few pennies. Let’s close it and sell another covered call.
ACTION: Buy to close KHC 25 Mar 40.50 call for around 0.02 or less. Sell to open the KHC 14 Apr 39 call for around 0.44 and a 1.1% return.
Buy to close KHC 25 Mar 40.50 call
Sell to open KHC 14 Apr 39 call
Note: If you are new to Triple Play Income, buy KHC at market and sell the KHC 15 Apr 39 call for around 0.40
Dow Inc. (DOW): 63.49
Dow stock is slowly climbing higher towards our recovery target of $69. The volatility in the options is giving us enough premium to roll our calls higher this week.
ACTION: Roll the DOW 25 Mar 63 call to the 8 Apr 64 call for a net credit of around 0.40 and .6% return
Buy to close DOW 25 Mar 63 call
Sell to open DOW 8 Apr 64 call
Note: If you don’t hold a position in DOW, buy the stock at market and sell the 8 Apr 64 call.
ONEOK, Inc. (OKE): 69.03
ONEOK is the natural gas stock that has benefited from spiking natural gas prices. The stock price is close to its 52-week high of $69.90 and could be overbought. However, natural gas prices don’t look to be abating in the short-term and we will continue to trade OKE for now.
We are a bit ham strung with OKE’s switch to monthly options, but we can still sell an out of the money put for a good chunk of credit.
ACTION: Sell to open OKE 14 Apr 67.50 put for a net credit of around 1.20 to 1.25 and a 1.8% return.
Triple Play Income
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