We Booked 4 Winners This Week – Pocketing $1041 In Income
December 18th, 2020
If you’ve followed me for any meaningful period of time, you know that I rarely agree with the conventional wisdom on Wall Street. I’m a contrarian and proud of it!
What many failed to realize is that we are in the midst of a consumer tech “supercycle.” As transistors — the building blocks of integrated circuits — shrink, you can fit more of them on a chip. This, in turn, means better performance for your devices. As more powerful chips become available, it spurs the development of new-and-improved devices. This creates demand for new, smaller, faster chips, and round and round we go.
This lack of foresight created a wonderful opportunity for value investors and income traders alike, as we’ve seen chip stocks come roaring back this year.
Every so often, however, I agree with the “experts.”
Barron’s recently asked 10 market strategists and chief investment officers at big banks and money-management firms to provide their outlooks for 2021. Their year-end forecasts for the S&P 500 ranged from 3,800 to 4,400. Averaging that out, the group anticipates the broader market index will advance close to 9% to about 4,040. When you throw in a dividend yield of about 2%, stocks could return 10% to 11%.
I also think a 10% return in 2021 is reasonable for stock investors. Of course, I’m not a stock investor. I’m an income trader, so I’ll be targeting a much higher annualized return.
Generally speaking, when I recommend a trade to Options Income Blueprint members, I target a 0.5% cash return in one week. If you can earn that 52 weeks a year, you’re looking at an annualized return of 26%.
Of course, that’s a rough guideline, and our trades often end up yielding much higher annualized returns.
This week, we booked four more winners. Traders who sold just one contract of each could have made $347 in cash. And as you can see below, each of those trades had an annualized return well over 26%.
However, I also expect to start trading some new names in the biopharmaceutical, financial and digital retail spaces, as will as some ETFs with attractive premiums.
Finally, while our focus will remain solidly on selling put options, I intend to recommend more buy-writes in the year ahead following the recent success of our Crocs (CROX) covered call trade.
All in all, I’m looking forward to the new year and the profit-making opportunities that lie ahead. I hope you are too.