$432 Cash In Our Pocket On 3 Trades This Week!
October 23rd, 2020
The stock market snapped its three-week win streak, but at Options Income Blueprint we kept ours going strong.
We closed out three more winners last week:
Traders who sold just one contract of each position could have generated a potential $144 in income.
As you can see by looking at the table above, we continue to have great success trading the familiar.
This was our third winning trade in AAPL since the company did a 4-for-1 stock split in late August. The combined potential income from those trades was $498 — in less than two months!
For GLW, this was our 10th trade on the glassmaker since early May. We’ve booked nine winners with one breakeven trade. Traders who sold a single contract of each could have racked up $374 in cash from this one stock.
Finally, with AMD, this was our fifth successful trade in a row on the semiconductor stock this year, with the potential for $365 in income.
As you can see, trading the familiar works!
Besides being excellent income producers for option sellers like us, the companies we traded last week have another thing in common. Each is scheduled to announce earnings next week.
This factored into my decision-making process when I recommended traders close these positions early rather than risk holding through expiration and potentially having to roll our puts out beyond the companies’ earnings date.
I often counsel Options Income Blueprint members to avoid holding positions through a company’s earnings announcement.
While premiums are generally high leading into an earnings report, these announcements are binary events. And even if a company exceeds expectations, there’s no guarantee its stock won’t sell off following the news.
So far, 27% of the companies in the S&P 500 have reported earnings for the third quarter of 2020, according to FactSet. A whopping 84% of those companies have beaten analyst estimates. That puts Q3 on track to be a record-setting quarter for earnings beats.
It’s clear that corporate earnings are holding up much better than analysts feared as companies navigate the coronavirus pandemic. However, investors have not been quick to reward companies that report better-than-expected results. They’ve been much more likely to punish the companies that miss estimates even by a small margin.
Take Intel (INTC), for example. We have an ongoing position in the stock, but I held off on recommending a new option to continue the position ahead of the company’s earnings announcement this week.
And, boy, am I glad I did.
Despite reporting better-than-expected earnings, the stock cratered more than 10% after Intel said it saw an unexpected drop in its server segment. Ouch!
We will continue to sell puts on INTC once the earnings dust settles, but this perfectly illustrates my point that it’s not worth the risk of holding a position through earnings to collect a few more cents in premium.