July Covered Calls Trades On Dividend Stocks Update #4

Small and large dividend stock investors can use covered calls and puts trades to generate monthly income from options premiums and options trading.

By Donald E. L. Johnson

Cautious Speculator

• Surge in options volume indicates bullish interest in July covered calls stocks.

• Concern about weak earnings has the markets trading lower pre-market this morning.

• Options on several of my expiring covered calls are trading at low prices. I’ll probably buy the options back and roll the covered calls trades to July 28 and later expiration trades.

• The risks are that stocks are ready to correct, which makes stock picking difficult.

Seven of my 13 open July covered calls trades saw sharp puts and calls options volumes surge Friday from their 5-day average volumes. That shows that mostly bullish traders are becoming more active in those stocks and their options. But markets are looking weaker this morning.

Southern Co. (SO) saw a 114.3% options volume jump while Kimberly-Clark (KMB) volume jumped 130.5% and Exxon Mobile Corp. (XOM) options volume rose 84.5%. Campbell Soup (CPB) volume rose 78.95, J.M. Smucker Co. (SJM) volume rose 60%, Cisco Systems (CSCO) rose 55.1% and Devon Energy Corp. (DVN) rose 25.4%.

Four of the stocks implied volatility was at 100% of their highest levels for the past month. That indicates that their options prices are fairly high, which is good for sellers of covered calls and cash secured puts.

All of the July covered calls trades options volumes were up Friday compared with their five-day open interest. That is another indication of growing interest in these stocks as the markets rally.

The four stocks with 100% 1 month IV Ranks are DVN, XOM, CSCO and SJM.

Click on images and zoom in for better views..

Five of the stocks with open calls positions have buy rankings of 8% of 13 technical indicators to 80% of them. That they are not at 100% of the technical indicators suggests that these stocks still have room to run. But the strength of CSCO, SO, KMB, Dow Inc. (DOW) and Phillips 66 (PSX) are weakening. See the far right column. Technicals don’t predict anything. They just tell analysts what’s been happening.

Nine of the July covered calls trades expire on Friday, July 21. They include DOW, DVN, KMB, Kroger Co. (KR), Lincon National Co. (LNC), Altria Group (MO), PSX, SJM and XOM.

I probably will buy many of the 7.21.23 expirations calls back early in the week and sell 7.28.23 or later covered calls on the stocks. Watch my comments below for updates.

LINKs:

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Beware. Like all investing, trading stocks and options is risky. 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 and options at any time. I receive no compensation for producing this content nor for any links.