Last Week's Income Report: October 18th, 2021
It’s tough to tell, but there’s a good deal of negativity in the market.
Inflation, higher energy prices, fear of Fed action, a pandemic, geopolitical tensions and fears of slowing economic growth have weighed on markets for days.
Fortunately, investors seem to be shrugging it all off thanks to better-than-expected earnings and solid consumer spending numbers.
In fact, September retail sales were up by 0.7% compared to expectations for a 0.2% decline. Excluding auto sales, the number was up by 0.8%, which also exceeded expectations for 0.5%. Year over year, retail sales jumped nearly 14%.
“Students heading back to school and workers returning to the office are likely the catalysts for the increased retail sales,” said Natalie Kotlyar, national leader of BDO’s retail and consumer products practice.
There’s hope markets can push even higher, as we head deeper into earnings season.
At Options Income Blueprint, we closed another five winners last week, generating $415 in cash.
This brings our total cash for the month of October to $512 with two more weeks to go before we close out the month. Most of the names on that list should be familiar to you, with the exception perhaps of Figs (FIGS). This was our first trade on the American health care apparel brand stock.
But we’ve traded Walgreens Boots Alliance (WBA) five times so far in 2021 – four winners and a small loser – generating $121 in cash. And we’ve booked seven successful trades in a row on Twitter (TWTR) in 2021, earning $452 in cash.
The stock I want to take a closer look at today, though, is Sunrun (RUN). Since July, we’ve booked five separate wins on the solar panel and battery storage company.
To date, we’ve made $574 on it. And since RUN is one of our Option Income Blueprint core stocks, we will continue to trade it with great frequency.
Let’s run through our latest trade on the stock so you can see how we landed such a big chunk of cash.
On Sept. 8, with the stock trading at $46.08, I recommended members sell the RUN Sept Monthly (9/17) 45 Put for $1.25, or $125 per contract.
I noted at the time that the stock only has monthly options available. This meant that if we were going to roll the position, we’d have to go out to the third week in October. But I was comfortable with that given RUN is a core stock and the fact that we were generating so much premium upfront. Collecting a large premium gives option sellers the flexibility when it comes to rolling or closing early.
As it turned out, we did need to roll the put. With two days to go before expiration, the stock was trading below the strike price of our put. Rather than risk being assigned shares, I recommended members buy back the current put and sell the RUN Oct Monthly (10/15) 45 Put.
The idea was to buy some time for shares to move in our favor. However, we also collected another $1.97 in income, bringing our total cash in hand to $3.22.
Now, things didn’t work out for us right away. In fact, RUN continued to drop, even briefly dipping below the $40 level in early October. But we remained calm and stuck with the position.
Support held and shares began to move higher. By Oct. 12, they were trading well above or $45 strike price, so I recommended members book a profit.
We gave back $0.40 to close the position, meaning we cashed out with a profit of $2.82, or $282 per contract. That represented a return of 6.3% over the $4,500 in capital we had allocated to the trade. And since the position was open for 35 days, our annualized rate of return was an impressive 65%.
As I said, we will continue to trade RUN. While solar stocks have fallen out of favor on Wall Street, Option Income Blueprint members have been raking in income thanks to the added volatility in the sector.