Income Alerts Newsletter for 12/31/2015

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 $114.00 for January 22 2016 are offering a 1.44% return, which annualizes at a rate of 22.78%.

Chart for QQQ

The DIA options at strike $176.00 for January 22 2016 are offering a 1.27% return, which annualizes at a rate of 20.11%.

Chart for DIA

The SPY options at strike $207.00 for January 22 2016 are offering a 1.27% return, which annualizes at a rate of 20.15%.

Chart for SPY


Technology Focus: Income Opportunities

A January covered call on QCOM at strike $50.50 using 300 shares is offering an income potential of $285. In February, a strike 52.50 covered call offers $417 and in March, a strike 52.50 covered call offers $495 in premium.

The annualized return by writing covered calls in January is 41.24%, in February is 19.90% and in March is 15.44%.

Chart for QCOM

A January covered call on BABA at strike $82.00 using 300 shares is offering an income potential of $564. In February, a strike 82.50 covered call offers $1,200 and in March, a strike 82.50 covered call offers $1,425 in premium.

The annualized return by writing covered calls in January is 50.58%, in February is 36.14% and in March is 28.17%.

Chart for BABA


Energy Focus: Income Opportunities

A January covered call on CVX at strike $90.50 using 300 shares is offering an income potential of $597. In February, a strike 95.00 covered call offers $501 and in March, a strike 95.00 covered call offers $690 in premium.

The annualized return by writing covered calls in January is 48.50%, in February is 13.26% and in March is 11.95%.

Chart for CVX

A January covered call on VLO at strike $72.00 using 300 shares is offering an income potential of $477. In February, a strike 72.50 covered call offers $837 and in March, a strike 72.50 covered call offers $1,035 in premium.

The annualized return by writing covered calls in January is 48.78%, in February is 28.47% and in March is 23.10%.

Chart for VLO


Healthcare Focus: Income Opportunities

A January covered call on PFE at strike $33.00 using 300 shares is offering an income potential of $96. In February, a strike 33.00 covered call offers $195 and in March, a strike 33.00 covered call offers $255 in premium.

The annualized return by writing covered calls in January is 21.15%, in February is 14.19% and in March is 12.14%.

Chart for PFE

A January covered call on HCA at strike $68.50 using 300 shares is offering an income potential of $570. In February, a strike 70.00 covered call offers $840 and in March, a strike 70.00 covered call offers $1,050 in premium.

The annualized return by writing covered calls in January is 61.31%, in February is 29.94% and in March is 24.59%.

Chart for HCA


Consumer Staples Focus: Income Opportunities

A January covered call on PM at strike $89.50 using 300 shares is offering an income potential of $264. In February, a strike 90.00 covered call offers $519 and in March, a strike 90.00 covered call offers $642 in premium.

The annualized return by writing covered calls in January is 21.43%, in February is 13.91% and in March is 11.24%.

Chart for PM

A January covered call on WBA at strike $86.50 using 300 shares is offering an income potential of $804. In February, a strike 90.00 covered call offers $600 and in March, a strike 90.00 covered call offers $771 in premium.

The annualized return by writing covered calls in January is 59.96%, in February is 16.55% and in March is 13.92%.

Chart for WBA


Consumer Discretionary Focus: Income Opportunities

A January covered call on DG at strike $72.50 using 300 shares is offering an income potential of $315. In February, a strike 72.50 covered call offers $600 and in May, a strike 72.50 covered call offers $1,170 in premium.

The annualized return by writing covered calls in January is 31.67%, in February is 19.99% and in May is 14.57%.

Chart for DG

A January covered call on HD at strike $134.00 using 300 shares is offering an income potential of $459. In February, a strike 135.00 covered call offers $780 and in March, a strike 135.00 covered call offers $1,170 in premium.

The annualized return by writing covered calls in January is 24.86%, in February is 13.92% and in March is 13.71%.

Chart for HD


Financials Focus: Income Opportunities

A February covered call on BAC at strike $18.00 using 300 shares is offering an income potential of $90. In March, a strike 18.00 covered call offers $132 in premium.

The annualized return by writing covered calls in February is 12.53% and in March is 12.04%.

Chart for BAC

A January covered call on AXP at strike $70.50 using 300 shares is offering an income potential of $237. In February, a strike 72.50 covered call offers $297 and in April, a strike 72.50 covered call offers $558 in premium.

The annualized return by writing covered calls in January is 24.42%, in February is 10.03% and in April is 9.19%.

Chart for AXP


Industrials Focus: Income Opportunities

A January covered call on UTX at strike $97.00 using 300 shares is offering an income potential of $357. In February, a strike 100.00 covered call offers $306 and in May, a strike 100.00 covered call offers $747 in premium.

The annualized return by writing covered calls in January is 26.70%, in February is 7.47% and in May is 6.73%.

Chart for UTX

A January covered call on GE at strike $31.50 using 300 shares is offering an income potential of $72. In February, a strike 32.00 covered call offers $120 and in March, a strike 32.00 covered call offers $156 in premium.

The annualized return by writing covered calls in January is 16.65%, in February is 9.12% and in March is 7.74%.

Chart for GE


Materials Focus: Income Opportunities

A February covered call on HUN at strike $12.00 using 300 shares is offering an income potential of $165. In May, a strike 12.00 covered call offers $300 in premium.

The annualized return by writing covered calls in February is 36.18% and in May is 24.98%.

Chart for HUN

A January covered call on MON at strike $99.50 using 300 shares is offering an income potential of $516. In February, a strike 100.00 covered call offers $747 and in April, a strike 100.00 covered call offers $1,155 in premium.

The annualized return by writing covered calls in January is 37.92%, in February is 18.09% and in April is 13.66%.

Chart for MON


Utilities Focus: Income Opportunities

A February covered call on CNP at strike $19.00 using 300 shares is offering an income potential of $90. In May, a strike 19.00 covered call offers $180 in premium.

The annualized return by writing covered calls in February is 11.70% and in May is 8.65%.

Chart for CNP

A January covered call on D at strike $70.00 using 300 shares is offering an income potential of $90. In February, a strike 70.00 covered call offers $300 and in April, a strike 70.00 covered call offers $450 in premium.

The annualized return by writing covered calls in January is 9.39%, in February is 10.34% and in April is 7.52%.

Chart for D


Telecommunications Focus: Income Opportunities

A February covered call on T at strike $35.00 using 300 shares is offering an income potential of $132. In March, a strike 35.00 covered call offers $180 in premium.

The annualized return by writing covered calls in February is 8.99% and in March is 8.01%.

Chart for T

A January covered call on TMUS at strike $40.00 using 300 shares is offering an income potential of $267. In February, a strike 40.00 covered call offers $525 and in May, a strike 40.00 covered call offers $891 in premium.

The annualized return by writing covered calls in January is 48.98%, in February is 32.20% and in May is 20.53%.

Chart for TMUS

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

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