Income Alerts Newsletter for 05/04/2016

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 DIA options at strike $177.50 for May 27 2016 are offering a 1.16% return, which annualizes at a rate of 17.61%.

Chart for DIA

The SPY options at strike $206.50 for May 27 2016 are offering a 1.34% return, which annualizes at a rate of 20.41%.

Chart for SPY


Technology Focus: Income Opportunities

A May covered call on PCLN at strike $1355.00 using 300 shares is offering an income potential of $14,040. In June, a strike 1355.00 covered call offers $17,610 and in July, a strike 1355.00 covered call offers $20,700 in premium.

The annualized return by writing covered calls in May is 72.56%, in June is 35.94% and in July is 26.47%.

Chart for PCLN

A May covered call on FB at strike $118.00 using 300 shares is offering an income potential of $678. In June, a strike 120.00 covered call offers $885 and in July, a strike 120.00 covered call offers $1,230 in premium.

The annualized return by writing covered calls in May is 39.79%, in June is 20.45% and in July is 17.84%.

Chart for FB


Energy Focus: Income Opportunities

A May covered call on HAL at strike $40.50 using 300 shares is offering an income potential of $357. In June, a strike 41.00 covered call offers $399 and in July, a strike 41.00 covered call offers $540 in premium.

The annualized return by writing covered calls in May is 61.48%, in June is 26.98% and in July is 22.98%.

Chart for HAL

A May covered call on HES at strike $57.50 using 300 shares is offering an income potential of $588. In June, a strike 57.50 covered call offers $1,275 and in July, a strike 57.50 covered call offers $1,035 in premium.

The annualized return by writing covered calls in May is 72.54%, in June is 64.23% and in July is 31.93%.

Chart for HES


Healthcare Focus: Income Opportunities

A May covered call on MCK at strike $170.00 using 300 shares is offering an income potential of $990. In June, a strike 170.00 covered call offers $1,500 and in August, a strike 170.00 covered call offers $2,070 in premium.

The annualized return by writing covered calls in May is 40.59%, in June is 24.32% and in August is 14.33%.

Chart for MCK

A May covered call on MRK at strike $55.50 using 300 shares is offering an income potential of $255. In June, a strike 57.50 covered call offers $144 and in July, a strike 57.50 covered call offers $210 in premium.

The annualized return by writing covered calls in May is 31.78%, in June is 6.98% and in July is 6.35%.

Chart for MRK


Consumer Staples Focus: Income Opportunities

A May covered call on ADM at strike $39.50 using 300 shares is offering an income potential of $174. In June, a strike 40.00 covered call offers $231 and in July, a strike 40.00 covered call offers $339 in premium.

The annualized return by writing covered calls in May is 30.53%, in June is 15.94% and in July is 14.68%.

Chart for ADM

A May covered call on CVS at strike $104.00 using 300 shares is offering an income potential of $405. In June, a strike 105.00 covered call offers $540 and in August, a strike 105.00 covered call offers $1,005 in premium.

The annualized return by writing covered calls in May is 26.69%, in June is 13.99% and in August is 11.15%.

Chart for CVS


Consumer Discretionary Focus: Income Opportunities

A May covered call on DG at strike $83.00 using 300 shares is offering an income potential of $405. In June, a strike 85.00 covered call offers $540 and in August, a strike 85.00 covered call offers $840 in premium.

The annualized return by writing covered calls in May is 33.56%, in June is 17.60% and in August is 11.70%.

Chart for DG

A May covered call on FOXA at strike $30.00 using 300 shares is offering an income potential of $240. In June, a strike 30.00 covered call offers $315 and in July, a strike 30.00 covered call offers $435 in premium.

The annualized return by writing covered calls in May is 55.63%, in June is 28.82% and in July is 25.09%.

Chart for FOXA


Financials Focus: Income Opportunities

A May covered call on BAC at strike $14.50 using 300 shares is offering an income potential of $78. In June, a strike 15.00 covered call offers $78 and in July, a strike 15.00 covered call offers $126 in premium.

The annualized return by writing covered calls in May is 37.39%, in June is 14.63% and in July is 14.86%.

Chart for BAC

A May covered call on MS at strike $27.00 using 300 shares is offering an income potential of $186. In June, a strike 27.00 covered call offers $294 and in July, a strike 27.00 covered call offers $402 in premium.

The annualized return by writing covered calls in May is 47.86%, in June is 30.01% and in July is 25.87%.

Chart for MS


Industrials Focus: Income Opportunities

A May covered call on UNP at strike $87.00 using 300 shares is offering an income potential of $543. In June, a strike 87.50 covered call offers $693 and in August, a strike 87.50 covered call offers $1,170 in premium.

The annualized return by writing covered calls in May is 43.20%, in June is 21.70% and in August is 15.76%.

Chart for UNP

A May covered call on UPS at strike $105.00 using 300 shares is offering an income potential of $261. In June, a strike 105.00 covered call offers $474 and in July, a strike 105.00 covered call offers $630 in premium.

The annualized return by writing covered calls in May is 17.04%, in June is 12.20% and in July is 10.13%.

Chart for UPS


Materials Focus: Income Opportunities

A May covered call on DOW at strike $52.00 using 300 shares is offering an income potential of $252. In June, a strike 52.50 covered call offers $366 and in September, a strike 52.50 covered call offers $726 in premium.

The annualized return by writing covered calls in May is 33.44%, in June is 19.15% and in September is 13.06%.

Chart for DOW

A May covered call on FCX at strike $12.50 using 300 shares is offering an income potential of $195. In June, a strike 13.00 covered call offers $273 and in July, a strike 13.00 covered call offers $360 in premium.

The annualized return by writing covered calls in May is 116.03%, in June is 65.05% and in July is 54.75%.

Chart for FCX


Utilities Focus: Income Opportunities

A May covered call on D at strike $72.50 using 300 shares is offering an income potential of $210. In June, a strike 72.50 covered call offers $330 and in July, a strike 72.50 covered call offers $435 in premium.

The annualized return by writing covered calls in May is 19.92%, in June is 12.32% and in July is 10.15%.

Chart for D

A May covered call on DUK at strike $80.00 using 300 shares is offering an income potential of $105. In June, a strike 80.00 covered call offers $255 and in July, a strike 80.00 covered call offers $360 in premium.

The annualized return by writing covered calls in May is 9.04%, in June is 8.65% and in July is 7.62%.

Chart for DUK


Telecommunications Focus: Income Opportunities

A May covered call on T at strike $39.00 using 300 shares is offering an income potential of $123. In June, a strike 39.00 covered call offers $210 and in July, a strike 39.00 covered call offers $246 in premium.

The annualized return by writing covered calls in May is 21.59%, in June is 14.54% and in July is 10.62%.

Chart for T

A May covered call on TMUS at strike $40.00 using 300 shares is offering an income potential of $222. In June, a strike 40.00 covered call offers $396 and in August, a strike 40.00 covered call offers $669 in premium.

The annualized return by writing covered calls in May is 38.55%, in June is 27.32% and in August is 19.95%.

Chart for TMUS

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

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