Last Week's Income Report: November 8th, 2021
Even though the major indices are technically stretched, the bull market rally shows no signs of slowing—especially after the passage of a $1 trillion infrastructure deal.
At the same time, markets are still shrugging off a good deal of negativity.
Inflation, for example, may get worse, says Goldman Sachs. In fact, “Due to ‘prolonged’ supply-demand imbalances, soaring wages and rising rent amid the housing boom, inflation metrics will remain ‘quite high for much of next year,’” they said, as noted by CNN.
Even Federal Reserve Chairman Jerome Powell says, “We see shortages and bottlenecks persisting into next year, well into next year. We see higher inflation persisting.”
But the market isn’t letting inflation hold it back, and neither are we.
At Options Income Blueprint, we closed two more winners last week, generating $76 in cash.
This brings our total income for the year to $6,781.
Marvell Technology Group (MRVL) is one of our five core Options Income Blueprint stocks.
I covered each of them in the October Income Report. But, in short, they are names I plan to trade with great frequency because they throw off large amounts of cash.
Case in point: We’ve traded MRVL four times in the past two months alone and a total of six times so far in 2021, booking $348 in income.
Since I covered MRVL last week, today I want to focus on Walgreens Boots Alliance (WBA).
We’ve traded Walgreens Boots Alliance (WBA) seven times this year – six winners and a small loser – generating $191 in cash.
Our average rate of return on those trades has been 0.6%. And since those trades were open for an average of just over nine days, our annualized rate of return on our WBA trades averages out to 40%.
Walgreens Boots Alliance is a traditional drug store chain that is evolving into a local, low-cost health care provider.
Last month, the company announced it was making a $5.2 billion investment in VillageMD, more than doubling its stake in the primary care network to 63%. I think going in this direction is a smart move that will also benefit the company’s retail stores by increasing foot traffic.
Walgreens is also benefitting from demand for COVID-19 test and vaccines. The company delivered an excellent fiscal fourth-quarter earnings report in mid-October, beating analysts’ estimates on the top and bottom lines.
Revenue increased 12.8% year over year to $34.3 billion, while adjusted net earnings jumped nearly 30%.
Management said it provided 13.5 million COVID-19 vaccinations in the most recent quarter, exceeding its goal. And CEO Roz Brewer noted that vaccines have had a “halo effect” on front-of-store sales.
With the growing number of employer mandates, expanding vaccine eligibility and the need for booster shots, I expect Walgreens to continue to be a beneficiary of the pandemic.
We entered out latest WBA trade on Oct. 26, with the stock trading at $48.66. I recommended members sell the WBA Nov. Week One (11/5) 48 Put, which was about 1.4% out of the money.
We picked up $0.51 in cash, or $51 a contract, for selling the option.
On Nov. 3, Walgreens’ competitor CVS Health (CVS) reported better-than-expected earnings, which were also helped by COVID-19 vaccinations. CVS rallied on the news and WBA followed suit.
By around 1 p.m. Eastern that day, our put was 2.3% out of the money and the premium had dropped to around $0.12.
I sent out an alert recommending that members buy the put back, and we booked a profit of $39 per contract.
Since we put up $4,800 in cash to secure the trade, this meant we earned a 0.8% return on our cash. And because the trade was open for nine days, our annualized rate of return was 33%.
While WBA is not a core Option Income Blueprint stock, it has been a huge winner for us so far this year. And, who knows, I may just make room for it soon on my list of elite income stocks.