We accepted shares in a number of Options Income Blueprint 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 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 Bank of America (BAC) and Charles Schwab (SCHW).
The financial sector ran up in 2021 on the expectation of higher interest rates. Yet, since the Federal Reserve began raising rates, the sector has suffered along with the rest of the market.
But there is no question about the underlying strength of Bank of America and Charles Schwab, which is why we remain in the positions.
Although BAC has not moved higher with interest rates, the bank is well-positioned to benefit from them. And SCHW received an upgrade this week, with a UBS analyst calling it “relatively insulated from both credit and market risk” and noting that this year’s sell-off presents a better risk/reward profile for investors.
Note that these trades are only for members who already own shares uncovered from previous positions.
BAC Uncovered Shares
Current Stock Price: $32.84
Cost Basis: $42.75
Action: Sell to open the BAC Jul Week One (7/1) 33.50 Call
Current Option Price: $0.48-$0.51
Recommended Limit: Set your initial limit order at $0.49, but adjust as needed to sell a call today
New Cost Basis: $42.26
Expiration: After the close on Friday, July 1
Potential Rate of Return: I am targeting breakeven for this position
SCHW Uncovered Shares
Current Stock Price: $62.36
Cost Basis: $71.95
Action: Sell to open the SCHW Jul Week One (7/1) 64 Call
Current Option Price: $0.83-$0.95
Recommended Limit: Set your initial limit order at $0.89, but adjust as needed to sell a call today
New Cost Basis: $71.06
Expiration: After the close on Friday, July 1
Potential Rate of Return: I am targeting breakeven for this position