Income Alerts Newsletter for 05/06/2016

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 $176.50 for May 27 2016 are offering a 1.14% return, which annualizes at a rate of 18.93%.

Chart for DIA

The SPY options at strike $205.00 for May 27 2016 are offering a 1.38% return, which annualizes at a rate of 22.98%.

Chart for SPY


Technology Focus: Income Opportunities

A May covered call on QCOM at strike $51.50 using 300 shares is offering an income potential of $192. In June, a strike 52.50 covered call offers $219 and in July, a strike 52.50 covered call offers $342 in premium.

The annualized return by writing covered calls in May is 28.92%, in June is 12.02% and in July is 11.56%.

Chart for QCOM

A May covered call on BABA at strike $79.00 using 300 shares is offering an income potential of $483. In June, a strike 80.00 covered call offers $747 and in July, a strike 80.00 covered call offers $945 in premium.

The annualized return by writing covered calls in May is 47.56%, in June is 27.06% and in July is 21.10%.

Chart for BABA


Energy Focus: Income Opportunities

A May covered call on HAL at strike $40.00 using 300 shares is offering an income potential of $297. In June, a strike 40.00 covered call offers $510 and in July, a strike 40.00 covered call offers $642 in premium.

The annualized return by writing covered calls in May is 57.98%, in June is 36.88% and in July is 28.70%.

Chart for HAL

A May covered call on HES at strike $56.00 using 300 shares is offering an income potential of $549. In June, a strike 57.50 covered call offers $708 and in July, a strike 57.50 covered call offers $945 in premium.

The annualized return by writing covered calls in May is 77.24%, in June is 36.58% and in July is 30.28%.

Chart for HES


Healthcare Focus: Income Opportunities

A May covered call on MCK at strike $175.00 using 300 shares is offering an income potential of $720. In June, a strike 175.00 covered call offers $1,410 and in August, a strike 175.00 covered call offers $2,160 in premium.

The annualized return by writing covered calls in May is 32.15%, in June is 23.21% and in August is 14.84%.

Chart for MCK

A June covered call on PFE at strike $34.00 using 300 shares is offering an income potential of $120. In July, a strike 34.00 covered call offers $192 in premium.

The annualized return by writing covered calls in June is 10.00% and in July is 9.85%.

Chart for PFE


Consumer Staples Focus: Income Opportunities

A May covered call on KO at strike $45.50 using 300 shares is offering an income potential of $81. In June, a strike 46.00 covered call offers $120 and in July, a strike 46.00 covered call offers $171 in premium.

The annualized return by writing covered calls in May is 13.75%, in June is 7.43% and in July is 6.49%.

Chart for KO

A May covered call on ADM at strike $38.50 using 300 shares is offering an income potential of $156. In June, a strike 39.00 covered call offers $216 and in July, a strike 39.00 covered call offers $327 in premium.

The annualized return by writing covered calls in May is 31.58%, in June is 15.99% and in July is 14.94%.

Chart for ADM


Consumer Discretionary Focus: Income Opportunities

A May covered call on DG at strike $83.00 using 300 shares is offering an income potential of $360. In June, a strike 85.00 covered call offers $525 and in August, a strike 85.00 covered call offers $855 in premium.

The annualized return by writing covered calls in May is 33.62%, in June is 17.95% and in August is 12.19%.

Chart for DG

A May covered call on FOXA at strike $30.00 using 300 shares is offering an income potential of $120. In June, a strike 30.00 covered call offers $225 and in July, a strike 30.00 covered call offers $435 in premium.

The annualized return by writing covered calls in May is 31.00%, in June is 21.39% and in July is 25.89%.

Chart for FOXA


Financials Focus: Income Opportunities

A July covered call on BAC at strike $15.00 using 300 shares is offering an income potential of $102.

The annualized return by writing covered calls in July is 12.57%.

Chart for BAC

A May covered call on MS at strike $26.50 using 300 shares is offering an income potential of $138. In June, a strike 27.00 covered call offers $207 and in July, a strike 27.00 covered call offers $303 in premium.

The annualized return by writing covered calls in May is 40.82%, in June is 22.46% and in July is 20.35%.

Chart for MS


Industrials Focus: Income Opportunities

A May covered call on UNP at strike $85.50 using 300 shares is offering an income potential of $477. In June, a strike 87.50 covered call offers $498 and in August, a strike 87.50 covered call offers $945 in premium.

The annualized return by writing covered calls in May is 43.39%, in June is 16.49% and in August is 13.10%.

Chart for UNP

A May covered call on DHR at strike $97.50 using 300 shares is offering an income potential of $165. In June, a strike 97.50 covered call offers $465 and in September, a strike 97.50 covered call offers $960 in premium.

The annualized return by writing covered calls in May is 13.13%, in June is 13.60% and in September is 9.31%.

Chart for DHR


Materials Focus: Income Opportunities

A May covered call on FCX at strike $11.50 using 300 shares is offering an income potential of $195. In June, a strike 12.00 covered call offers $267 and in July, a strike 12.00 covered call offers $366 in premium.

The annualized return by writing covered calls in May is 139.36%, in June is 70.99% and in July is 61.42%.

Chart for FCX

A May covered call on HUN at strike $15.00 using 300 shares is offering an income potential of $90. In June, a strike 15.00 covered call offers $180 and in August, a strike 15.00 covered call offers $360 in premium.

The annualized return by writing covered calls in May is 47.99%, in June is 35.65% and in August is 30.64%.

Chart for HUN


Utilities Focus: Income Opportunities

A May covered call on D at strike $72.50 using 300 shares is offering an income potential of $225. In June, a strike 72.50 covered call offers $375 and in July, a strike 72.50 covered call offers $450 in premium.

The annualized return by writing covered calls in May is 24.02%, in June is 14.66% and in July is 10.79%.

Chart for D

A June covered call on DUK at strike $82.50 using 300 shares is offering an income potential of $135. In July, a strike 82.50 covered call offers $240 in premium.

The annualized return by writing covered calls in June is 4.68% and in July is 5.11%.

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 $90. In June, a strike 39.00 covered call offers $186 and in July, a strike 39.00 covered call offers $228 in premium.

The annualized return by writing covered calls in May is 17.80%, in June is 13.49% and in July is 10.14%.

Chart for T

A May covered call on TMUS at strike $39.50 using 300 shares is offering an income potential of $225. In June, a strike 40.00 covered call offers $357 and in August, a strike 40.00 covered call offers $621 in premium.

The annualized return by writing covered calls in May is 44.44%, in June is 25.94% and in August is 18.99%.

Chart for TMUS

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

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