Stock Picking 2021

[RVplusDog]

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Originally Posted by Bryan Barnfellow I have a concentrated portfolio of stocks with strong dividend growth characteristics, which represents 40% of our income. Recently I sold INTC--a 20 year hold--because of continuing execution and competitive concerns. Also, sold CVX and KMI and now am completely out of any fossil fuel names. Looking to an increasingly likely green energy future.

I was hoping the fossil fuel companies have a bit more of upside during the first half of the year or so. And I think I remember seeing info from PSX on their roadmap away from fossil fuels... I still have cvx, kmi, and psx. My sorta-greener kinda-energy plays are nee, LNG, NI, OGS, ETR, GE, ENB, CNP, and maybe some parts of my utilities (DUK, ED, & reducing my D). I also have generator, solar, & battery exposure. I hope those are profitable companies going forward.

[Dash man]

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Originally Posted by RVplusDog I was hoping the fossil fuel companies have a bit more of upside during the first half of the year or so. And I think I remember seeing info from PSX on their roadmap away from fossil fuels... I still have cvx, kmi, and psx. My sorta-greener kinda-energy plays are nee, LNG, NI, OGS, ETR, GE, ENB, CNP, and maybe some parts of my utilities (DUK, ED, & reducing my D). I also have generator, solar, & battery exposure. I hope those are profitable companies going forward.

My green energy play is CMI. Building natural gas trucks, but more importantly are working on hydrogen powered trucks.

[Out-to-Lunch]

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Originally Posted by Dash man My green energy play is CMI. Building natural gas trucks, but more importantly are working on hydrogen powered trucks.

Do they have any plans on where to acquire the hydrogen?

[Dash man]

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Originally Posted by Out-to-Lunch Do they have any plans on where to acquire the hydrogen?

https://www.cummins.com/news/2021/02...en-year-review

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[jurgs01]

I shorted GBTC, RIOT, and ETHE on Friday, and bought some puts on RIOT. How low can Bitcoin go this week? Looking to buy and cover about half of my positions today.

Also short a bunch of speculative tech stocks. Hopefully they continue tanking this week and I can cover and roll the gains into some value plays.

[Sunset]

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Originally Posted by jurgs01 I shorted GBTC, RIOT, and ETHE on Friday, and bought some puts on RIOT. How low can Bitcoin go this week? Looking to buy and cover about half of my positions today. Also short a bunch of speculative tech stocks. Hopefully they continue tanking this week and I can cover and roll the gains into some value plays.

I'm too chicken to really short anything, the closest I'll come is selling puts on ARKG.

[NgineER]

Aargh - getting punished this week. Up 50% over the last 90 days in my play Roth, but some of that has now been taken back over the last couple of days. Hoping to just stay the course and maybe buy some more...

[Dash man]

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Originally Posted by NgineER Aargh - getting punished this week. Up 50% over the last 90 days in my play Roth, but some of that has now been taken back over the last couple of days. Hoping to just stay the course and maybe buy some more...

At first glance it looks like we’re getting punished, then I look further back an see how far it’s risen over the past year.
This might be a good time to do some selective stock Roth conversions.

[RVplusDog]

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Originally Posted by Sunset I'm too chicken to really short anything, the closest I'll come is selling puts on ARKG.

I sold puts on a lot of stocks I’d like to own. I think I’m at under 5% assigned. I sold a last-minute put on PLTR last week that came in at a price lower than the limit buy I had previously placed. Then I was able to sell calls on that PLTR for 21% APY at a $45 strike, so that worked out well.

I’m slowly learning which stocks have good volume & premium on options. There’s prolly great tools /websites out there for that which I haven’t found yet :-)

[Sunset]

One issue I have with selling Calls and Puts, is evaluating (or knowing) what is a good price in relation to the strike price and stock and I'm sure volatility plays a role.

Until I learn how to figure out that, I'm just going by my feelings of:
How do I feel selling my stock at price X in some number of days (if it gets called), and the opposite about selling the put.

[DR1959]

I do alot with calls and puts.

Cash Secured puts, with a call date right before a good stock pays a dividend is a good trade. I get the premium and if I get assigned, I then grab the dividend. I then immediately write a covered call.

Covered calls also just after a dividend is paid, so I can grab dividend and then lose my stock.

Another play I like is a LEAP on a good dividend stock. So you take a stock paying a solid 5%, buy the common, write a covered call with a call price well over your cost. In 1 year, you collect 5%, plus if you get called, the premium and the difference on call over cost. You can pocket 20% plus, better than a CD!!

I think best way to play market is look for these income plays and not look to make a killing on a growth stock.

[finnski1]

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Originally Posted by DR1959 I do alot with calls and puts. Cash Secured puts, with a call date right before a good stock pays a dividend is a good trade. I get the premium and if I get assigned, I then grab the dividend. I then immediately write a covered call. Covered calls also just after a dividend is paid, so I can grab dividend and then lose my stock. Another play I like is a LEAP on a good dividend stock. So you take a stock paying a solid 5%, buy the common, write a covered call with a call price well over your cost. In 1 year, you collect 5%, plus if you get called, the premium and the difference on call over cost. You can pocket 20% plus, better than a CD!! I think best way to play market is look for these income plays and not look to make a killing on a growth stock.

How does "grabbing the dividend" on the put you wrote gain you anything since the stock price is automatically reduced by the amount of the dividend.

example: stock xyz trading at $52 you sell a put at $50 with a March 31st strike @ a premium of $2.00 and a dividend date of say Apr 2nd. On Apr 2 it pays a $1 dividend.
On Mar 30th it drops to $48. The stock is put to you at $50. Your cost is ($50-$2) $48. On apr 2nd you get a $1.00 dividend and your cost is now $47 but the price of the stock is adjusted to $47 as well. So you either have a $48 stock that you paid $48 for or a $47 stock that you paid $47 for. Therefore the dividend didn't gain you anything. If you then "immediately write a covered call" it will gain you less premium if you write it when it is valued at $47 than it would if you wrote it @$48, again a wash.

[DR1959]

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Originally Posted by finnski1 How does "grabbing the dividend" on the put you wrote gain you anything since the stock price is automatically reduced by the amount of the dividend. example: stock xyz trading at $52 you sell a put at $50 with a March 31st strike @ a premium of $2.00 and a dividend date of say Apr 2nd. On Apr 2 it pays a $1 dividend. On Mar 30th it drops to $48. The stock is put to you at $50. Your cost is ($50-$2) $48. On apr 2nd you get a $1.00 dividend and your cost is now $47 but the price of the stock is adjusted to $47 as well. So you either have a $48 stock that you paid $48 for or a $47 stock that you paid $47 for. Therefore the dividend didn't gain you anything. If you then "immediately write a covered call" it will gain you less premium if you write it when it is valued at $47 than it would if you wrote it @$48, again a wash.

So you are missing something.
Use your XYZ example but lets say 4/2 is the Ex-div date, I don't use div-date.
If you sell a $50 Put, you pocket the $2 premium and it has to get below $50 for it to be assigned to you by 3/31.
If it doesn't you pocket the $2 and it expires worthless.
If it does, then on 3/31 you get assigned the stock, let's say it dropped to $49, now you are in the stock at $48. On 4/2 it goes ex, and it drops further but before it did that you wrote a covered call for $50, now you get the premium from that and the dividend.

It's not foolproof, but I rarely lose on the trade if done right.
Try it on paper and you will see!
I also play with stocks I don't mind owning if I get stuck.

[finnski1]

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Originally Posted by DR1959 So you are missing something. Use your XYZ example but lets say 4/2 is the Ex-div date, I don't use div-date. If you sell a $50 Put, you pocket the $2 premium and it has to get below $50 for it to be assigned to you by 3/31. If it doesn't you pocket the $2 and it expires worthless. If it does, then on 3/31 you get assigned the stock, let's say it dropped to $49, now you are in the stock at $48. On 4/2 it goes ex, and it drops further but before it did that you wrote a covered call for $50, now you get the premium from that and the dividend. It's not foolproof, but I rarely lose on the trade if done right. Try it on paper and you will see! I also play with stocks I don't mind owning if I get stuck.

When I wrote "dividend date" I meant the ex div date (the day the stock price is adjusted down by the dividend amount) not the "payout date". Sorry for that confusion. The price is immediately adjusted down on that ex div date not the payout date as you pointed out. So I can see how your example would work.

So at a minimum you always collect the premium(from writing the put) and the dividend. The risk of course is that the price drops below the strike -premium-dividend before expiration and you now own it for more than it is worth. so say it went to $45 before Mar 31st and it cost you $47(50-2-1) to own it. So now you are down $2 and your covered call writing yields a smaller premium than hoped for.

On the plus side if it is a good stock you don't mind owning you still only paid $47 for it rather than $50.
Still there is that grey area of when to write the covered call. Do you now wait and hope it jumps back up from $45 before the ex date and possibly fall further behind or do you just write it right away regardless.
I guess it also even depends on how close the strike date is to the ex date so that you even have a choice.

[DR1959]

You get a feel for it as you do it. There are still many variables, like the overall market. Works well in a bull market, but if you get caught holding and dividend stock, then you are still earning. Also your boosting your income by writing covered calls. I have some stocks I have been in and out 10 plus times a year. Some I keep writing calls and keep pocketing dividends. I have a goal of $500 a week and I have achieved that the last 2 years and exceeded it. This year my average is $1200 a week. I am playing with a decent amount of capital and retired, so its more of a hobby.

Don't get greedy. I will take $100 from a trade in 1 day and be happy. Better than gambling and better than getting .01% on MM.

But don't get me wrong, last March/April, I was holding and sitting on covered calls. I made money on every call but was sitting on large losses, market came back and I wrote covered calls all the way back and called out on most of them.

Cash secured puts, you need to have the cash in account. I calculate my yield on the cash. So if I secure a put with say $10K and it makes $100 in say 1 month or less, that is a 12% plus annual yield and I happy with that!

[finnski1]

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Originally Posted by DR1959 You get a feel for it as you do it. There are still many variables, like the overall market. Works well in a bull market, but if you get caught holding and dividend stock, then you are still earning. Also your boosting your income by writing covered calls. I have some stocks I have been in and out 10 plus times a year. Some I keep writing calls and keep pocketing dividends. I have a goal of $500 a week and I have achieved that the last 2 years and exceeded it. This year my average is $1200 a week. I am playing with a decent amount of capital and retired, so its more of a hobby. Don't get greedy. I will take $100 from a trade in 1 day and be happy. Better than gambling and better than getting .01% on MM. But don't get me wrong, last March/April, I was holding and sitting on covered calls. I made money on every call but was sitting on large losses, market came back and I wrote covered calls all the way back and called out on most of them. Cash secured puts, you need to have the cash in account. I calculate my yield on the cash. So if I secure a put with say $10K and it makes $100 in say 1 month or less, that is a 12% plus annual yield and I happy with that!

Thanks for the replies. Just wanted to make sure I understood your approach correctly.

[Realizm]

I don’t see much of a difference between investing in an ETF that you know nothing about except the first few top holdings, and diversifying into ~50 individuals stocks. I am a control freak when it comes to investments, if I don’t know what it is I can’t invest. The biggest difference between the two is how involved you have to be. I personally enjoy finance news and having control over my investments. But any ETF can do good or bad with somebody else doing that research for you.

My top picks have been Tesla, Square, Apple, Disney, Shopify, Bank of America (funny how well the banks shot back after the big dip, made a lot of investing on the dip), and many others. The growth can’t last but 2020 was an insanely good and abnormal year for me being up over 230%. My mentor only invests in individual stocks and has done very well for himself. I still pick ETFs like Ark when I don’t have as much knowledge on a sector. It’s the long term investments that win the most, so I won’t be selling for awhile.

[DR1959]

What do you think of this?
You take a company like ATT
You buy the common at 28.50
You write a covered call for $15 on Jan 2022 at 13.50
So dividend yield is .52 a share or 7.3% at current price.
Odds are you won't get the final dividend on 1/8/22 bc you will probably lose the stock, but if you do get the other 3 payouts, you get 1.56 on a $15 investment which is over 10% if annualized but its less than a year, so its better.

What's the risk? Will ATT trade below $15 in a year or go bankrupt?

[RVplusDog]

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Originally Posted by DR1959 What do you think of this? You take a company like ATT You buy the common at 28.50 You write a covered call for $15 on Jan 2022 at 13.50 So dividend yield is .52 a share or 7.3% at current price. Odds are you won't get the final dividend on 1/8/22 bc you will probably lose the stock, but if you do get the other 3 payouts, you get 1.56 on a $15 investment which is over 10% if annualized but its less than a year, so its better. What's the risk? Will ATT trade below $15 in a year or go bankrupt?

I don’t understand why you wouldn’t write the call at a higher strike price. Is it just to earn that higher premium up front? I can get static return of 5.4% on a $30 strike, earning $156 up front, still getting all the dividends, and netting $31.56 all told if the stock gets called, 11% annualized before the dividends. Just a different way to skin the cat?

[DR1959]

Well if you write it higher you take more risk.
If att closes at say $20 you lost all your gains on the common loss. You will be holding a losing stock.

My scenario is much less risk with more gain and less capital needed. There is a good chance you will get called and pocket the dividend.