As expected, the Fed raised interest rates today by 0.75 points and indicated that future rate hikes are likely. The market was up this morning and was not surprised by the news.
We held off trading this week until after the Fed meeting, just to be on the cautious side of this market. We still have the GDP number to be released tomorrow morning and earnings reports continue to come in this week from high profile stocks as well as several of our Triple Play Income stocks.
We can go ahead and trade a couple of our positions today that are running counter cyclical to the market news or we moved well past their earnings release.
Dow Inc. (DOW): 51.81
Dow stock price is slowly bouncing back after a mixed earnings report last week. The stock is uncovered and we can sell a covered call for a reasonable premium today.
ACTION: Sell to open DOW 19 Aug 54 call for a credit of around 0.065 to 0.70 and a 1.3% return.
Philip Morris (PM): 96.92
Philip Morris stock price has held in there after the June “swoon” and is starting to trade higher. We have a 29 Jul 97.50 call we can roll out a couple of weeks and raise our strike we while collecting more credit.
ACTION: Roll PM 29 Jul 97.50 call to the 12 Aug 98 call for a net credit of around 0.85 to 0.90 and a .9% return.
We have uncovered stock positions in BGS, BX and IBM. Let’s will wait until after tomorrow’s GDP report and the market reaction before we trade these positions. Look for an alert late tomorrow morning.
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