Seller's Paradise

Kiplinger magazine ran an article showing what they called the 7 Best Dividend Stocks Of The Dow. They based their opinion on the facts that the chosen stocks had strong track records of dividend increases as well as a business outlook strong enough to support continue dividends and long-term stock price growth.

Some of their picks, like MSFT, UNH, and NKE, offer annualized returns over 18% if you use a covered call strategy to enhance their income. In our blog article we show some covered calls you might consider if you like Kiplinger's selection process. See 7 Best Dividend Stocks Of The Dow.

Writing covered calls on an ETF that tracks an index is a good way to remove single stock risk. ETFs like QQQ, SPY, and DIA are collections of many stocks. If one of their constituent stocks has a bad day its effect will be muted on the ETF overall.

Gavin McMaster wrote an article showing that from 5 popular ETFs (QQQ, SPY, XLF, DIA, and GLD), the Qs, or QQQ, (which tracks the NASDAQ 100) has higher volatility and, therefore, better premiums for writing covered calls. Something to take a look at if you like writing covered calls on index ETFs.

Last week AAPL hit another milestone: At a price of $119.29 the company had a market cap of $700 billion. (The second largest company on Friday was XOM with a distant $400 billion market cap.)

AAPL has 5.86484 billion shares outstanding. Assuming that number doesn't change through buy-backs or new issuances then AAPL will be worth $800B at $136.36/share, $900B at $153.43, and a cool trillion dollars at $170.51.

With its current price of 118.93, shares of AAPL will have to rise by 43% to achieve the trillion dollar milestone. Activist investor Carl Ichan owns 53 million shares and has written that he believes AAPL is worth $203/share. Others are not quite that optimistic but still bullish, with price targets generally in the 140 range (a 17% rise from today's price).

TheStreet.com came up with a list of Top 5 Big Dividend Stocks that they felt could raise dividends soon. Their idea was to make a list of fundamentally strong investment candidates that could stand on their own but also have the extra benefit of a near-term increase in the dividend.

We looked at their list and agree that 4 of the 5 stocks make sense for conservative portfolios. Then we layered on some covered calls to reduce risk and increase their yield even more. For the complete story please see Top 5 Dividend Stocks Want To Pay You More.

OPEC's decision on Nov 27 not to cut output achieved their desired goal of dropping the price of oil, which in turn took its toll on Halliburton. Our article on how to make 3% Per Month With Halliburton showed a December monthly covered call with a net debit of 45.99. HAL closed Friday at 42.14, putting the position underwater on paper. However, we feel HAL is a fundamentally good company and now would be a good time to double-down.

If you were in the earlier trade with a net debit of 45.99 for 100 shares, imagine you bought another 100 shares at 42.14 and wrote a Dec 44 strike for 0.89, for a net debit of 41.25. In addition, HAL goes ex-div on Dec 3 for 18 cents.

If neither position is called (ie HAL is below 44 at the close on Dec 19) then your average net debit for the 200 shares is (45.99 + 41.25)/2 - 0.18 = 43.44. Then, on Dec 22nd, with this new lower basis you could write a Jan 43.50 strike, for example, on 200 shares. If those Jan calls were assigned then you'd come out ahead for the 2 month trade.

This is one way to do stock repair (average down your cost). We chose this method because we fundamentally like HAL as a company. There are other ways to save or repair a losing covered call trade listed in our article on 6 Ways To Do Stock Repair.

With about three weeks to go until the December options expire, the top 4 covered calls Born To Sell members have written are (in order of popularity):

(Note: Born To Sell members have access to the full Top 10 Covered Call list, as well as having this list update real-time as members change positions. These are not recommendations, they are merely a reflection of our members' current positions.)

Currently, the top 8 stocks Born To Sell members are using for their Watchlist are (in order of popularity):

(Note: Born To Sell members have access to the full Top 20 Watchlist, as well as having this list update real-time as members change their watchlists. And, you can have the highest yielding covered calls from your personal watchlist emailed to you after the close each day. Never miss a fat premium from your watchlist again!)

Born To Sell is dedicated to only one thing: Making Money With Covered Calls. Our subscribers have access to state-of-the-art covered call screeners and covered call portfolio management tools. For less than the profit of a single trade you could be enjoying recurring monthly income using our tools. Three subscription types to choose from:

Plus, all subscriptions begin with a no-obligation 2-week free trial. What are you waiting for? Start collecting premium today!

Happy Trading,

The Born To Sell Team