Your Weekly Income Report

We’ve also talked about the profits we’ve been making in gold-related equities, earning more than $4,000 in cash so far this year across our services. In the previous Weekly Income Report, we reviewed the specific ETFs and companies we’ve been trading in this sector. 

Gold hit a record high above $3,500 an ounce on Tuesday before pulling back a bit later in the week. However, gold prices are likely to remain elevated due to uncertainty surrounding President Donald Trump’s tariff policy and his latest attacks on Federal Reserve Chair Jerome Powell, which have sparked concerns over central bank independence. 

But outside of bearish trades and traditional havens like gold and other metals, where can traders turn that might be safe(ish)?

We’ve compiled a list of tariff/disruption-proof sectors that offer a good place to start:

• Consumer staples
• Defense
• Financials
• Utilities 
• Real estate 
• Health care 

Of course, not all companies in these sectors fall into the tariff/disruption-proof category, so it’s important to be selective and do your due diligence. But we’ve already started to find some luck with a few of these. 

In particular, we closed out both a consumer staples and a defense stock play in Income Masters last week. 

Consumer staples are an obvious choice during times of economic disruption and rising inflation – two things most economists agree are coming down the pike if tariffs come to fruition. Demand for consumer staples tends to be relatively stable, even during recessions, making the companies that produce them more resilient during economic downturns.

When most people think of consumer staples, the first things that come to mind are food and beverages and household and personal care products. In other words, things that are considered essential for everyday life.

Yet, alcohol and tobacco products also fall into the consumer staples group. It almost feels antithetical, given that these products are more likely to kill you than sustain you. But what countless economic downturns have shown is that people continue to spend on these products regardless of whether the economy is struggling or their personal finances are tight. 

This led us back to tobacco company Philip Morris (PM), a former Perpetual Income stock. It is also the fifth largest holding in the Consumer Staples Select Sector SPDR Fund (XLP).

Even though people are smoking less than they used to in many parts of the world, the company’s products still experience consistent demand from a significant consumer base. What’s more, the company is focusing its resources on the expansion of its smoke-free tobacco product line. 

We utilized a bull put spread strategy with PM, going out to the May monthly expiration and selling the top leg 11.5% out of the money (OTM) to provide some cushion should shares trade lower. We also noted at the time of entry that the trade was going out past the company’s earnings report. 

While trading over earnings adds an additional layer of risk, Philip Morris has generated steady revenue and profit growth over the years, as you would expect from a consumer staple. Furthermore, as option sellers, we can benefit from higher premiums associated with earnings-related volatility and subsequent post-earnings volatility crush. 

This is exactly what happened with PM. On April 23, the company reported better-than-expected first-quarter results, noting strong sales of its smokeless products like Zyn nicotine pouches. Management also raised its full-year profit forecast. That is not something investors have seen much of this earnings season, with many companies declining to give forward guidance due to tariff uncertainty.

Traders responded by pushing shares to a new record high above $170 per share. Two days later, our bull put spread hit its target exit price and we pocketed $240 in cash on five contracts in just over a week.

Defense contractor Lockheed Martin (LMT) was the other tariff/disruption-proof trade that we closed last week. 

A significant portion of the company’s revenue comes directly from contracts with the U.S. Department of Defense and other government agencies. While LMT does have international sales and some global supply chains, a significant portion of its manufacturing and assembly for U.S. contracts takes place within the United States. This lessens the company’s reliance on large-scale imports that could be subject to tariffs. 

Additionally, many defense contracts are long-term, which can provide some insulation against short-term fluctuations in trade policy.

In contrast to the PM trade, our LMT bull put spread was a post-earnings play. We entered the position shortly after the company reported first-quarter results on April 22. 

Lockheed beat analysts’ earnings estimates, noting strong demand for its missile systems and fighter jets. After an initial pop, shares traded lower, providing a nice entry point. 

We again went with the May monthly expiration, and our top leg was about 7% OTM. The post-earnings pullback turned out to be a blip on the radar. The stock continued to climb for the remainder of the week and our target exit price was hit on Friday afternoon. We exited the trade with a profit of $185 on five contracts in just three days. 

While the PM and LMT trades certainly weren’t our biggest winners from a cash perspective, they are great examples of bullish plays on tariff/disruption-proof sectors. 

In addition to targeting select stocks in these safe(er) sectors, we’ve been fairly conservative with our target exit prices rather than “going for broke”… because we’re not trying to go broke. For instance, with the two aforementioned trades, we targeted 50% of max profit versus the 70% to 80% we might target in stronger market. 

We’d rather rack up smaller wins with these defensive plays and exit sooner to reduce our risk of being caught on the wrong side of a market swing.