We accepted shares in a number of positions last week. As I said, the math of selling calls simply makes more sense in the current market environment than continuing to roll the puts. Not only will we be able to collect cash, but we can capture potential appreciation when the market recovers.
The goal will be to generate a minimum of a 0.5% cash return on these positions. However, we may accept a lower cash rate of return if I believe there is significant potential for short-term appreciation.
I am recommending calls to sell on Walt Disney (DIS) and Kroger Co. (KR).
I think the fears about travel and streaming slowdowns that have hit DIS are overblown. In its most recent quarter, Disney added 7.9 million new subscribers to its Disney Plus streaming service, while Netflix said it lost 200,000 subscribers in Q1.
CEO Bob Chapek noted on the company’s earnings call that demand at Disney’s theme parks remains high despite the broader economic slowdown. And that demand is likely to rise at the company’s U.S. parks with the Centers for Disease Control dropping its COVID-19 testing requirements for international travelers.
Kroger saw sales at its grocery stores skyrocket during the pandemic. I believe it will continue to increase its market share as a desire to cut costs amid rising inflation keeps people from dining out.
Note that these trades are only for members who already own shares uncovered from previous positions.
DIS Uncovered Shares
Current Stock Price: $94.38
Cost Basis: $120.64
Action: Sell to open the DIS Jul Week One (7/1) 97 Call for around $1.12, but adjust as needed to sell a call today
New Cost Basis: $119.52
KR Uncovered Shares
Current Stock Price: $47.82
Cost Basis: $56.65
Action: Sell to open the KR Jul Week One (7/1) 49 Call for around $0.57, but adjust as needed to sell a call today
New Cost Basis: $56.08