AAPL, CAT Beat on Earnings; Selling Cash Secured Puts Generates Premium Income
I cover what I’m trading and how I’m looking at stocks and options. I can’t predict markets, stock prices or interest rates. Nobody can. All we can do is trade.
By Donald E. L. Johnson
Cautious Speculator
Two critically important earnings reports from Apple (AAPL) and Caterpillar (CAT) are bullish for the economy and the companies’ longer-term prospects. That makes both stocks good income trading candidates for options traders.
Cautious traders who aren’t ready to buy the stocks in the market now might:
Sell one AAPL 2.18.22 $140 (delta -.13) puts option for about $2 a share, or more after the markets open. There is about a 13% probability that the stock will fall to $140 and be assigned. If you’re more risk averse try selling AAPL March $125 puts.
Sell one CAT 2.18.22 $170 puts (delta -.07) for about $0.72 pre market. There is about a 7% probability that the stock will fall to $170 by Feb. 18. If you’re more risk averse, try selling CAT March $150 puts.
These prices will change after the markets open at 9:30 a.m. EST. I’ll update the trade ideas in comments before noon and after the markets settle down for the day.
Question for commenters: Are you likely to buy AAPL or CAT based on their earnings reports?
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Like all investing, trading stocks and options is risky. If you can’t sleep with market risks, you might want to let someone else do your trading. I'm an active private speculator who trades covered calls and sells puts on stocks for my accounts. I am not a professional analyst nor a financial advisor. I don't take and won't take responsibility for how other people trade. This article is for educational purposes only. It is not advice. The data presented looked accurate at publication time except for intra-day fluctuations, but I can’t guarantee the accuracy. Traders should do their due diligence. I reserve the right to trade any of the listed stocks at any time. I own CAT stock and/or options positions.
At 11:04 a.m., EST, AAPL is up $7.66 to $166.60. CAT is down $12.06 to $199.75. DIA is down $0.67 to $340.76. If I sell puts on these equities, it will be at -.10 to -.15 deltas and at strikes that wold assign the stocks at 10% to 20% discounts to current prices. At this point, it is unlikely that I'll do any trades today.
Hi, just found your blog. Great info, if I was to sell a cover call at AAPL, what would you recommend? I don't plan to get it assign. Great blog, bookmark.