Stocks To Watch For Covered Calls, Puts Trades

Last week's failed rally, weak futures will keep options income traders on sidelines. Is this a dip, or is the market headed much lower?

• Good covered calls, cash secured puts trades need bullish moves.

• SPY, DIA, IWM, QQQ futures weak.

• XLE, XOM and CVX are dipping.

By Donald E. L. Johnson

Cautious Speculator

After spending a few hours yesterday planning to sell covered calls and cash secured puts on dividend paying stocks that look like promising income investments and trades, I’m pulling back because the markets stalled last week with a failed rally. This morning’s futures continue to be weak.

Again, this is what I’m doing. I can’t predict markets. Nobody can. All we can do is trade, or not.

Buying stocks and writing covered calls on them and selling puts are bullish trades that are best done when markets are bullish or at least moving sideways, I think.

The above charts are mixed. Most of the blue 20-day moving averages lines are below the red 50-dma lines. The market indexes last week rallied but failed to break above their resistance levels and stay there. The MACD indicators looking bullish, but futures are weak. I am not a professional technician.

Over the last week, I’ve written about or traded puts and calls on: SPY, IWM, T, PYPL, XOM, UPS, ORCl and T. My watch list for this week includes those stocks plus ABBV, PFE, DE, AAPL, MRK, QCOM, HON and MMM.

At this point, I don’t know what the markets will do today or this week. Futures and morning trading sessions often are reversed in the afternoon. Some experienced options traders prefer to do trades early in the week. At this point, looking at actual trades is a waste of time.

As the day evolves, I’ll evaluate trades and watch the charts. Not trading often is the best decision you can make. This may be a good day to work on watch lists.

Question: Do you have a trading plan for the next week and month?

LINKs:

Home Page. See links to options and stock picking web sites and other resources.

@realDonJohnson. I’m active on twitter where I tweet and link to tweets about stocks that I like.

Calls vs Puts Options: What’s the Difference?

Beware

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. Consider an option trading ETF like XYLD, which I own. I also trade its calls and puts. 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 own or have options  on SPY, IWM, ABBV, PFE, PYPL and T.