With the Federal Reserve rate hike out of the way, we can begin to manage our open positions. For the first time in the history of Triple Play Income, we own a record 12 stocks without a covered call.

A lot of that came about since the banking crisis unfolded on March 9, when the news broke that Silicon Valley Bank was going down. While the broader market has recovered some ground, our value stocks are still looking to get back to previous highs.

Our approach is to sell calls when we see one of our stocks trading higher for three to five days in a row (or two big up days). We’ve only seen that from a few of our stocks in the past two weeks, which has forced us to be patient and sit on open positions until we see the market trend higher.

However, a sell-off like this gives us a chance to sell puts, since we sell puts when the market trades lower for three to six days. Since we own stocks in all of our positions, we can open up a new position today.

 

NEW TRADE
NetApp (NTAP): 61.38

Typically, when we add a new position, we provide a detailed analysis of the company with our trade alert. Given the market this week, I’d like to recommend NetApp (NTAP) today and follow up with the background information early next week

Here are a few key reasons to add NetApp to our portfolio:

• The company provides cloud-led and data-centric services to manage and share data on-premises, and private and public clouds worldwide.
• It has beaten analysts’ earnings estimates in each of the past four quarters while growing net revenue.
• It’s light on debt with a solid cash outlook that can easily cover future dividends.
• For a tech stock, NTAP has been a solid dividend play, raising its annual payout each year for the past nine years.
• NetApp goes ex-dividend on April 5, paying $0.50 per share.

Let’s sell an at-the-money put one week out ahead of the ex-dividend date. If it goes in the money, we will take assignment of shares to collect the dividend. If it expires worthless, we will buy the stock before the April 5 deadline.

ACTION: Sell to open the NTAP 31 Mar 61.50 put for a net credit of around 1.10 to 1.20

 

And as I said earlier, we will follow up with a more detailed analysis of NTAP next week.