Income Alerts Newsletter for 05/11/2016

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 $107.50 for June 3 2016 are offering a 1.31% return, which annualizes at a rate of 19.95%.

Chart for QQQ

The DIA options at strike $179.50 for June 3 2016 are offering a 0.58% return, which annualizes at a rate of 8.88%.

Chart for DIA

The SPY options at strike $208.50 for June 3 2016 are offering a 1.15% return, which annualizes at a rate of 17.42%.

Chart for SPY


Technology Focus: Income Opportunities

A May covered call on QCOM at strike $52.50 using 300 shares is offering an income potential of $141. In June, a strike 52.50 covered call offers $285 and in July, a strike 52.50 covered call offers $429 in premium.

The annualized return by writing covered calls in May is 30.18%, in June is 17.37% and in July is 15.36%.

Chart for QCOM

A May covered call on BABA at strike $80.00 using 300 shares is offering an income potential of $348. In June, a strike 80.00 covered call offers $744 and in July, a strike 80.00 covered call offers $1,020 in premium.

The annualized return by writing covered calls in May is 49.00%, in June is 30.05% and in July is 24.27%.

Chart for BABA


Energy Focus: Income Opportunities

A May covered call on HAL at strike $39.00 using 300 shares is offering an income potential of $225. In June, a strike 39.00 covered call offers $456 and in July, a strike 39.00 covered call offers $591 in premium.

The annualized return by writing covered calls in May is 65.34%, in June is 38.12% and in July is 29.11%.

Chart for HAL

A May covered call on HES at strike $58.00 using 300 shares is offering an income potential of $384. In June, a strike 60.00 covered call offers $513 and in July, a strike 60.00 covered call offers $789 in premium.

The annualized return by writing covered calls in May is 75.27%, in June is 28.58% and in July is 26.01%.

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 $255. In June, a strike 175.00 covered call offers $900 and in August, a strike 175.00 covered call offers $2,250 in premium.

The annualized return by writing covered calls in May is 16.64%, in June is 16.78% and in August is 16.48%.

Chart for MCK

A May covered call on MRK at strike $55.00 using 300 shares is offering an income potential of $123. In June, a strike 55.00 covered call offers $279 and in July, a strike 55.00 covered call offers $381 in premium.

The annualized return by writing covered calls in May is 25.07%, in June is 16.19% and in July is 12.95%.

Chart for MRK


Consumer Staples Focus: Income Opportunities

A June covered call on KO at strike $46.00 using 300 shares is offering an income potential of $174. In July, a strike 46.00 covered call offers $231 in premium.

The annualized return by writing covered calls in June is 12.02% and in July is 9.33%.

Chart for KO

A May covered call on ADM at strike $38.50 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 $324 in premium.

The annualized return by writing covered calls in May is 35.81%, in June is 17.38% and in July is 15.77%.

Chart for ADM


Consumer Discretionary Focus: Income Opportunities

A May covered call on DG at strike $84.50 using 300 shares is offering an income potential of $300. In June, a strike 85.00 covered call offers $705 and in August, a strike 85.00 covered call offers $1,050 in premium.

The annualized return by writing covered calls in May is 39.82%, in June is 26.83% and in August is 15.50%.

Chart for DG

A May covered call on FOXA at strike $30.00 using 300 shares is offering an income potential of $90. In June, a strike 30.00 covered call offers $150 and in July, a strike 30.00 covered call offers $285 in premium.

The annualized return by writing covered calls in May is 33.79%, in June is 15.99% and in July is 17.96%.

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 $111.

The annualized return by writing covered calls in July is 14.47%.

Chart for BAC

A May covered call on MS at strike $27.00 using 300 shares is offering an income potential of $87. In June, a strike 27.00 covered call offers $240 and in July, a strike 27.00 covered call offers $336 in premium.

The annualized return by writing covered calls in May is 36.53%, in June is 28.99% and in July is 23.92%.

Chart for MS


Industrials Focus: Income Opportunities

A May covered call on UNP at strike $86.50 using 300 shares is offering an income potential of $381. In June, a strike 87.50 covered call offers $519 and in August, a strike 87.50 covered call offers $1,035 in premium.

The annualized return by writing covered calls in May is 49.68%, in June is 19.19% and in August is 14.94%.

Chart for UNP

A May covered call on UPS at strike $104.00 using 300 shares is offering an income potential of $201. In June, a strike 105.00 covered call offers $267 and in July, a strike 105.00 covered call offers $435 in premium.

The annualized return by writing covered calls in May is 21.59%, in June is 8.11% and in July is 7.73%.

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 $138. In June, a strike 52.50 covered call offers $267 and in September, a strike 52.50 covered call offers $654 in premium.

The annualized return by writing covered calls in May is 29.88%, in June is 16.45% and in September is 12.40%.

Chart for DOW

A May covered call on FCX at strike $11.00 using 300 shares is offering an income potential of $183. In June, a strike 11.00 covered call offers $339 and in July, a strike 11.00 covered call offers $423 in premium.

The annualized return by writing covered calls in May is 197.47%, in June is 108.69% and in July is 81.28%.

Chart for FCX


Utilities Focus: Income Opportunities

A June covered call on DUK at strike $82.50 using 300 shares is offering an income potential of $120. In July, a strike 82.50 covered call offers $225 in premium.

The annualized return by writing covered calls in June is 4.70% and in July is 5.15%.

Chart for DUK

A May covered call on ED at strike $75.00 using 300 shares is offering an income potential of $120. In June, a strike 75.00 covered call offers $255 and in August, a strike 75.00 covered call offers $510 in premium.

The annualized return by writing covered calls in May is 18.08%, in June is 10.90% and in August is 8.44%.

Chart for ED


Telecommunications Focus: Income Opportunities

A May covered call on VZ at strike $52.00 using 300 shares is offering an income potential of $72. In June, a strike 52.50 covered call offers $159 and in July, a strike 52.50 covered call offers $228 in premium.

The annualized return by writing covered calls in May is 15.52%, in June is 9.72% and in July is 8.15%.

Chart for VZ

A June covered call on LVLT at strike $55.00 using 300 shares is offering an income potential of $240. In September, a strike 55.00 covered call offers $750 in premium.

The annualized return by writing covered calls in June is 14.37% and in September is 13.93%.

Chart for LVLT

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

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