US Income Strategy Recommendation: Lowe’s Companies Inc (LOW)

Posted on January 18th, 2010 admin No Comments

The Income Strategy is an extremely powerful portfolio strategy that incorporates a combination of Stock and Options. It is designed to produce a consistent monthly income while providing capital protection for the portfolio.

The Income Strategy is very popular with Self Managed Super Fund (SMSF) and longer term wealth building individuals.

This is an Income Strategy Recommendation for investors looking to invest in the US market. The recommendation is buy LOW shares at a discount to market. The recommended trade is to sell put options on LOW with the intent to purchase the shares. This recommendation is designed for investor looking to generate monthly income with capital protection. Instead of buying LOW shares today at market at $22.91 we can place this trade which gives an equivalent entry price at $21.95 a discount of 4.2% and a price I am happy to buy the shares at.

Trade

  • Sell 44 contracts LOW January $22.50 Puts   @ 80 cents  
  • Buy 44 contracts LOW January $20.00 Puts   @ 25 cents

Net Credit 55 cents

Shares per contract = 100

Trade Summary

Maximum Profit – $2420 USD

Maximum Loss – $8580 USD

 Breakeven – $21.95

 Return on Share Value – 2.44%

 Annualised Return on Share Value – 29.28%

 Return on Risk (ROR) – 28.21%

If exercised we will purchase 4,400 shares at $22.50 which is a trade value of $99,000. When entering this trade you need to be aware and able to purchase the shares if exercised.

Brief Overview

Lowe’s Companies, Inc., together with its subsidiaries, operates as a home improvement retailer in the United States and Canada. The company provides a range of products and services for home decoration, maintenance, repair, remodelling, and property maintenance. It offers home improvement products in various categories, such as appliances, lumber, paint, flooring, building materials, millwork, lawn and landscape products, fashion plumbing, hardware, lighting, tools, seasonal living, rough plumbing, outdoor power equipment, cabinets and countertops, nursery, rough electrical, home environment, home organization, and windows and walls.

Reason for Trade

  • Technical Analysis – LOW is a buy at these levels with strong support at $22.00 and our breakeven is below this level.
  • Return on Risk above 25%
  • Capital Protection at 91.12%

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US Income Strategy Recommendation: AT&T Inc (T)

Posted on January 18th, 2010 admin No Comments

The Income Strategy is an extremely powerful portfolio strategy that incorporates a combination of Stock and Options. It is designed to produce a consistent monthly income while providing capital protection for the portfolio.

The Income Strategy is very popular with Self Managed Super Fund (SMSF) and longer term wealth building individuals.

This is an Income Strategy Recommendation for investors looking to invest in the US Stock Market. The recommendation is buy AT&T shares at a discount to market. The recommended trade is to sell put options on AT&T with the intent to purchase the shares. This recommendation is designed for investor looking to generate monthly income with capital protection. Instead of buying AT&T shares today at market at $27.56 we can place this trade which gives an equivalent entry price at $26.55 a discount of 3.66% and a price I am happy to buy the shares at.

Trade

Sell 37 contracts T January $27.00 Puts @ 65 cents

Buy 37 contracts T January $25.00 Puts @ 20 cents

Net Credit 45 cents

Shares per contract = 100

Trade Summary

Maximum Profit – $1665 USD

Maximum Loss – $5735 USD

 Breakeven – $26.55

 Return on Share Value – 1.70%

 Annualised Return on Share Value – 20.40%

 Return on Risk (ROR) – 29.03%

 If exercised we will purchase 3,700 shares at $27.00 which is a trade value of $99,900. When entering this trade you need to be aware and able to purchase the shares if exercised.

 Brief Overview

 AT&T Inc. operates as a communications holding company. Its subsidiaries and affiliates provide the AT&T brand services in the United States and internationally. The company’s Wireless segment offers wireless voice communications services, including local wireless communications, long-distance, and roaming services with various post-paid and prepaid service plans. This segment also supplies various handsets and personal computer wireless data cards, as well as accessories. 

Reason for Trade

  • Technical Analysis – AT&T is a buy at these levels with strong support at $27.00 which is where the stock has broken above resistance and looks to be heading higher.
  • Return on Risk above 25%
  • Capital Protection at 94.16%

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US Income Strategy Recommendation: Weyerhaeuser Co (WY)

Posted on January 18th, 2010 admin No Comments

The Income Strategy is an extremely powerful portfolio strategy that incorporates a combination of Stock and Options. It is designed to produce a consistent monthly income while providing capital protection for the portfolio.

The Income Strategy is very popular with Self Managed Super Fund (SMSF) and longer term wealth building individuals.

This is an Income Strategy Recommendation for investors looking to invest in the US Stock Market. The recommendation is buy WY shares at a discount to market. The recommended trade is to sell put options on WY with the intent to purchase the shares. This recommendation is designed for investor looking to generate monthly income with capital protection. Instead of buying WY shares today at market at $41.87 we can place this trade which gives an equivalent entry price at $39.00 a discount of 6.85% and a price we are happy to buy the shares at.

Trade

  • Sell 25 contracts WY January $40.00 Puts   @ 140 cents  
  • Buy 25 contracts WY January $36.00 Puts   @ 40 cents

Net Credit 100 cents

Shares per contract = 100

Trade Summary

 Maximum Profit – $2500 USD

 Maximum Loss – $7500 USD

 Breakeven – $39.00

 Return on Share Value – 2.5%

 Annualised Return on Share Value – 30%

 Return on Risk (ROR) – 33.33%

If exercised we will purchase 2,500 shares at $40.00 which is a trade value of $100,000. When entering this trade you need to be aware and able to purchase the shares if exercised. 

Brief Overview

Weyerhaeuser Company grows and harvests trees, builds homes, and manufactures forest products worldwide. The company manages approximately 6 million of private commercial forestland and leases the other 700,000 acres; and has renewable long-term licenses on 15.2 million acres of forestland. It grows and harvests trees for use as lumber, pulp and paper, and other wood and building products; and offers logs, timber, minerals, oil, gas, seed and seedlings, and poles, as well as plywood and hardwood lumber. 

Reason for Trade 

  • Technical Analysis – WY is a buy at these levels with strong support at $40.00 which is where the stock has broken above resistance and which is now very strong support level.  
  • Return on Risk above 25%  
  • Capital Protection at 92.31%

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