Income Alerts Newsletter for 04/14/2016

Safety First

With capital preservation as our most important priority, we begin as always with a focus on index covered calls, which mitigate company specific risk.

Writing covered calls on ETFs, such as QQQs, is attractive to conservative investors who may not have the time to monitor a selection of companies on a watchlist and wish to avoid risks associated with trading specific companies, such as earnings surprises.

The QQQ options at strike $111.00 for May 6 2016 are offering a 1.45% return, which annualizes at a rate of 22.93%.

Chart for QQQ

The DIA options at strike $179.00 for May 6 2016 are offering a 1.08% return, which annualizes at a rate of 17.12%.

Chart for DIA

The SPY options at strike $208.50 for May 6 2016 are offering a 0.91% return, which annualizes at a rate of 14.40%.

Chart for SPY


Technology Focus: Income Opportunities

An April covered call on QCOM at strike $52.00 using 300 shares is offering an income potential of $126. In May, a strike 52.50 covered call offers $489 and in June, a strike 52.50 covered call offers $528 in premium.

The annualized return by writing covered calls in April is 99.22%, in May is 31.13% and in June is 19.40%.

Chart for QCOM

An April covered call on BABA at strike $80.00 using 300 shares is offering an income potential of $156. In May, a strike 80.00 covered call offers $930 and in July, a strike 80.00 covered call offers $1,230 in premium.

The annualized return by writing covered calls in April is 79.96%, in May is 38.90% and in July is 21.08%.

Chart for BABA


Energy Focus: Income Opportunities

An April covered call on EOG at strike $78.00 using 300 shares is offering an income potential of $261. In May, a strike 80.00 covered call offers $669 and in July, a strike 80.00 covered call offers $1,155 in premium.

The annualized return by writing covered calls in April is 137.63%, in May is 28.35% and in July is 20.22%.

Chart for EOG

An April covered call on OXY at strike $72.50 using 300 shares is offering an income potential of $126. In May, a strike 72.50 covered call offers $612 and in August, a strike 72.50 covered call offers $1,065 in premium.

The annualized return by writing covered calls in April is 71.15%, in May is 27.91% and in August is 14.62%.

Chart for OXY


Healthcare Focus: Income Opportunities

An April covered call on ESRX at strike $71.50 using 300 shares is offering an income potential of $111. In May, a strike 72.50 covered call offers $543 and in June, a strike 72.50 covered call offers $699 in premium.

The annualized return by writing covered calls in April is 63.64%, in May is 25.09% and in June is 18.73%.

Chart for ESRX

A May covered call on MRK at strike $57.50 using 300 shares is offering an income potential of $162. In June, a strike 57.50 covered call offers $234 in premium.

The annualized return by writing covered calls in May is 9.36% and in June is 7.82%.

Chart for MRK


Consumer Staples Focus: Income Opportunities

A May covered call on CVS at strike $105.00 using 300 shares is offering an income potential of $183. In August, a strike 105.00 covered call offers $642 in premium.

The annualized return by writing covered calls in May is 5.83% and in August is 6.12%.

Chart for CVS

A May covered call on KO at strike $47.00 using 300 shares is offering an income potential of $150. In June, a strike 47.00 covered call offers $189 in premium.

The annualized return by writing covered calls in May is 10.55% and in June is 7.67%.

Chart for KO


Consumer Discretionary Focus: Income Opportunities

A May covered call on GM at strike $31.00 using 300 shares is offering an income potential of $288. In June, a strike 31.00 covered call offers $339 in premium.

The annualized return by writing covered calls in May is 30.92% and in June is 21.08%.

Chart for GM

An April covered call on HD at strike $134.00 using 300 shares is offering an income potential of $162. In May, a strike 135.00 covered call offers $822 and in June, a strike 135.00 covered call offers $975 in premium.

The annualized return by writing covered calls in April is 49.29%, in May is 20.08% and in June is 13.76%.

Chart for HD


Financials Focus: Income Opportunities

A May covered call on BAC at strike $14.00 using 300 shares is offering an income potential of $120. In June, a strike 14.00 covered call offers $150 in premium.

The annualized return by writing covered calls in May is 28.69% and in June is 20.81%.

Chart for BAC

A May covered call on MS at strike $26.00 using 300 shares is offering an income potential of $252. In June, a strike 26.00 covered call offers $342 in premium.

The annualized return by writing covered calls in May is 32.22% and in June is 25.48%.

Chart for MS


Industrials Focus: Income Opportunities

An April covered call on UNP at strike $82.00 using 300 shares is offering an income potential of $135. In May, a strike 82.50 covered call offers $654 and in August, a strike 82.50 covered call offers $1,140 in premium.

The annualized return by writing covered calls in April is 67.37%, in May is 26.33% and in August is 13.80%.

Chart for UNP

An April covered call on UPS at strike $106.00 using 300 shares is offering an income potential of $114. In May, a strike 110.00 covered call offers $198 and in July, a strike 110.00 covered call offers $396 in premium.

The annualized return by writing covered calls in April is 43.96%, in May is 6.04% and in July is 4.92%.

Chart for UPS


Materials Focus: Income Opportunities

A May covered call on LYB at strike $90.00 using 300 shares is offering an income potential of $705. In June, a strike 90.00 covered call offers $900 in premium.

The annualized return by writing covered calls in May is 26.23% and in June is 19.43%.

Chart for LYB

An April covered call on MON at strike $90.00 using 300 shares is offering an income potential of $180. In May, a strike 90.00 covered call offers $678 and in July, a strike 90.00 covered call offers $1,350 in premium.

The annualized return by writing covered calls in April is 81.89%, in May is 24.81% and in July is 20.50%.

Chart for MON


Utilities Focus: Income Opportunities

A May covered call on DUK at strike $80.00 using 300 shares is offering an income potential of $360. In July, a strike 80.00 covered call offers $570 in premium.

The annualized return by writing covered calls in May is 14.70% and in July is 9.49%.

Chart for DUK

A May covered call on ED at strike $77.50 using 300 shares is offering an income potential of $135. In August, a strike 77.50 covered call offers $405 in premium.

The annualized return by writing covered calls in May is 5.78% and in August is 5.17%.

Chart for ED


Telecommunications Focus: Income Opportunities

A May covered call on CTL at strike $33.00 using 300 shares is offering an income potential of $240. In July, a strike 33.00 covered call offers $330 in premium.

The annualized return by writing covered calls in May is 24.48% and in July is 13.74%.

Chart for CTL

A May covered call on SBAC at strike $105.00 using 300 shares is offering an income potential of $435. In June, a strike 105.00 covered call offers $795 in premium.

The annualized return by writing covered calls in May is 13.93% and in June is 14.83%.

Chart for SBAC

* Prices quoted were as of time of writing and may not be current.

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