The market is holding and adding to the gains from yesterday which has challenged several of our positions expiring this week. And we need to add one new trade on an existing position we were called out of last week.

COVERED CALL

IBM (IBM):  132.82

IBM stock price has finally moved higher after its recent earnings report sell-off and going ex-dividend earlier this week. We have the stock uncovered and can finally sell a covered call for a reasonable premium.

ACTION:  Sell to open IBM 26 Aug 135 call for a net credit of around 0.95 to 1.00.

New Members: This trade is good for new members. Buy the IBM at market and sell the 135 call for 0.95 to 1.00.

TRADE ROLL

Philip Morris (PM):  100.22

In the past, Philip Morris stock price would rise when the market was trading lower and remain flat when the market was trading higher. It was the classic defensive type of position to maintain in our portfolio.

We are finding that PM is rallying with the market this week and we will need to roll our 12 Aug 98 call out. Let’s roll it out two weeks strike-to-strike for a solid credit and see if the price holds at $100 or above.

TRADE ACTION:  Roll the PM 12 Aug 98 call to the 26 Aug 98 call for a net credit of around 0.80 to 0.90.

Buy to close 12 Aug 98 call

Sell to open 26 Aug 98 call

New Members: If you are a new member, you can enter this trade by purchasing PM stock at market but sell the 26 Aug 101 call for around 1.05 to 1.15. 

BUY WRITE

Southern Co. (SO):  78.40

Our utility Southern Co. that we were called out of last Friday goes ex-dividend tomorrow that will earn us a 0.68 dividend. We can buy the stock and sell a covered call today as a buy/write.

ACTION:  Open a Buy/Write for SO buying the stock and selling a 26 Aug 79 call for net debit of around 77.90

Buy SO stock at around 78.46

Sell to open SO 26 Aug 79 call for a credit of around 0.50 to 0.55

This trade is good for all members.