Income Alerts Newsletter for 04/15/2016

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 1.50% return, which annualizes at a rate of 24.90%.

Chart for QQQ

The DIA options at strike $179.50 for May 6 2016 are offering a 0.94% return, which annualizes at a rate of 15.52%.

Chart for DIA

The SPY options at strike $208.50 for May 6 2016 are offering a 1.05% return, which annualizes at a rate of 17.49%.

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 $78. In May, a strike 52.50 covered call offers $477 and in June, a strike 52.50 covered call offers $540 in premium.

The annualized return by writing covered calls in April is 92.03%, in May is 31.23% and in June is 20.21%.

Chart for QCOM

An April covered call on BABA at strike $80.00 using 300 shares is offering an income potential of $99. In May, a strike 80.00 covered call offers $915 and in July, a strike 80.00 covered call offers $1,320 in premium.

The annualized return by writing covered calls in April is 75.96%, in May is 39.30% and in July is 22.96%.

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 $120. In May, a strike 80.00 covered call offers $666 and in July, a strike 80.00 covered call offers $1,140 in premium.

The annualized return by writing covered calls in April is 94.30%, in May is 28.97% and in July is 20.15%.

Chart for EOG

An April covered call on OXY at strike $74.50 using 300 shares is offering an income potential of $81. In May, a strike 75.00 covered call offers $546 and in August, a strike 75.00 covered call offers $930 in premium.

The annualized return by writing covered calls in April is 66.54%, in May is 24.76% and in August is 12.41%.

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 $105. In May, a strike 72.50 covered call offers $522 and in June, a strike 72.50 covered call offers $678 in premium.

The annualized return by writing covered calls in April is 90.19%, in May is 24.72% and in June is 18.42%.

Chart for ESRX

A May covered call on MRK at strike $57.50 using 300 shares is offering an income potential of $210. In June, a strike 57.50 covered call offers $291 in premium.

The annualized return by writing covered calls in May is 12.39% and in June is 9.82%.

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 $156. In August, a strike 105.00 covered call offers $618 in premium.

The annualized return by writing covered calls in May is 5.10% and in August is 5.93%.

Chart for CVS

A May covered call on KO at strike $46.00 using 300 shares is offering an income potential of $243. In June, a strike 46.00 covered call offers $294 in premium.

The annualized return by writing covered calls in May is 17.75% and in June is 12.27%.

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 $276. In June, a strike 31.00 covered call offers $327 in premium.

The annualized return by writing covered calls in May is 30.46% and in June is 20.66%.

Chart for GM

A May covered call on HD at strike $135.00 using 300 shares is offering an income potential of $825. In June, a strike 135.00 covered call offers $1,050 in premium.

The annualized return by writing covered calls in May is 20.61% and in June is 15.02%.

Chart for HD


Financials Focus: Income Opportunities

A June covered call on BAC at strike $15.00 using 300 shares is offering an income potential of $75.

The annualized return by writing covered calls in June is 10.11%.

Chart for BAC

A May covered call on MS at strike $27.00 using 300 shares is offering an income potential of $171. In June, a strike 27.00 covered call offers $237 in premium.

The annualized return by writing covered calls in May is 21.96% and in June is 17.48%.

Chart for MS


Industrials Focus: Income Opportunities

An April covered call on UNP at strike $82.50 using 300 shares is offering an income potential of $78. In May, a strike 82.50 covered call offers $780 and in August, a strike 82.50 covered call offers $1,320 in premium.

The annualized return by writing covered calls in April is 57.82%, in May is 32.17% and in August is 16.10%.

Chart for UNP

A May covered call on UPS at strike $110.00 using 300 shares is offering an income potential of $147. In July, a strike 110.00 covered call offers $354 in premium.

The annualized return by writing covered calls in May is 4.62% and in July is 4.46%.

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 $690. In June, a strike 90.00 covered call offers $825 in premium.

The annualized return by writing covered calls in May is 26.35% and in June is 18.03%.

Chart for LYB

An April covered call on MON at strike $89.00 using 300 shares is offering an income potential of $120. In May, a strike 90.00 covered call offers $705 and in July, a strike 90.00 covered call offers $1,215 in premium.

The annualized return by writing covered calls in April is 82.44%, in May is 26.77% and in July is 18.72%.

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 $330. In July, a strike 80.00 covered call offers $510 in premium.

The annualized return by writing covered calls in May is 13.85% and in July is 8.58%.

Chart for DUK

A May covered call on ED at strike $77.50 using 300 shares is offering an income potential of $150. In August, a strike 77.50 covered call offers $420 in premium.

The annualized return by writing covered calls in May is 6.60% and in August is 5.40%.

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 $210. In July, a strike 33.00 covered call offers $315 in premium.

The annualized return by writing covered calls in May is 22.00% and in July is 13.28%.

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 $735 in premium.

The annualized return by writing covered calls in May is 14.39% and in June is 13.98%.

Chart for SBAC

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

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