Last Month's Income Report: November 1st, 2021
Markets don’t seem to know the meaning of down.
Even with inflationary threats, higher oil prices and fears of Fed tapering, stocks rallied to higher highs. The market doesn’t even seem concerned that third-quarter GDP disappointed with 0.5% growth, or that inflation jumped at a 4.4% annual rate in September.
Instead, stocks pushed higher, with the S&P 500 making new high after new high, largely thanks to strong corporate earnings.
“Risk appetite remains on the table for U.S. equities,” said Craig Johnson, Piper Sandler’s chief market technician, as quoted by CNBC. “Corporate earnings have been the key catalyst behind the recent record-high rally as robust demand continues to offset well-known supply constraints and pricing pressures.”
At Options Income Blueprint, October was another successful month.
We closed nine winners in a row. Those who sold just one contract of each earned $543 in income, bringing our year-to-date cash total to $6,705.
Below is a rundown of October’s closed trades.
If you’ve been following my weekly musings, most of these names should look familiar to you. In fact, the only new name on the list is Figs (FIGS). This was our first trade on the American health care apparel brand stock.
But as I always say, I’m not looking for the next hot stock. I’m perfectly comfortable trading the familiar over and over to generate reliable cash by selling options.
Recently, I took this concept one step further, introducing what I call “core stocks” to Options Income Blueprint members. Our core stocks are names that I plan to trade with great frequency because they throw off large amounts of cash.
While I reserve the right to change or add to the list at any time, our current core stocks are (in no particular order):
General Motors (GM)
Marvell Technology (MRVL)
Let’s quickly run through each stock and take a look back at how we’ve traded them so far this year.
You might be surprised to see a solar stock on my list of core stocks given that the sector largely fell out of favor on Wall Street following a huge run-up that accelerated after the November 2020 election.
But the added volatility in the sector has led to some outsized premiums in the options of solar panel and battery storage company Sunrun. Since June, we’ve booked five separate wins, collecting $574 in cash.
As world leaders and companies grapple with how to combat climate change risk, I think traders will find plenty of opportunity in the renewable energy space.
General Motors (GM)
Speaking of renewable energy plays, our next core stock has gone from trading like a traditional automaker to trading like an electric vehicle stock – and with good reason.
General Motors has pledged to invest $27 billion to develop electric and autonomous vehicles between 2020 and 2025. The company has plans to launch the Chevy Bolt, Cadillac LYRIQ, GMC Hummer EV and highly anticipated Silverado electric pickup next year. By 2025, GM expects to deliver 1 million electric vehicles globally. By 2035, management says GM will be an all-electric car company.
In the first three months of the year, we closed six GM winners in a row, earning $457 in income.
The next position we put on was in late June. Our timing was less than ideal, as the stock experienced a sharp sell-off and didn’t bottom out until September. Rather than accept a loss on a great company, we have been using an active recovery strategy to generate income on the stock nearly every week.
Pfizer is another trade in which we are employing an active recovery strategy. However, prior to that, we closed four winners in a row, generating $250 in cash.
Pfizer is a misunderstood company on Wall Street. It’s almost as if investors think COVID-19 is going to magically disappear. It’s not. And neither is the money Pfizer is making from its vaccine. In fact, the company just increased its full-year COVID-19 vaccine sales forecast by around 7% to $36 billion.
With only about half of the world’s population vaccinated, eligibility being expanded to children and research showing the need for booster shots, I simply can’t understand why anyone would bet against Pfizer right now. That’s why, at Options Income Blueprint, we’ll be trading PFE for the long haul.
Next up we have what has quickly become one of our most reliable income generators. We began selling options on the well-known financial institution in late July.
Since then, we’ve closed seven successful trades on Citigroup, earning $284 in income. While that may not sound like a great deal of cash, consider that we generated an average return of 0.6% on those trades. And since they were open for an average of just over three days, our average annualized rate of return stands at 74%.
When selecting put options to sell, I’m generally targeting an average annualized return of at least 26%. With Citigroup, we’ve consistently blown that goal out of the water.
Marvell Technology (MRVL)
Last but not least, we have one of my favorite semiconductor stocks, Marvell Technology.
It’s been a bumpy ride for the chip sector this year thanks to the global chip shortage, but the trend is clearly up.
So far in 2021, we’ve traded MRVL five times using a mix of puts and covered calls, earning $311 in cash.
With analysts saying chip shortages could persist well into 2022, volatility in semi stocks is likely to remain elevated. That’s a good thing for option traders like us, as heightened volatility means heightened premiums for the options we sell.
There you have it, my five core Option Income Blueprint stocks. As we head into the final two months of 2021, I expect these names to continue throwing off a ton of cash for members.