I like to invest in companies I pay money to.

mmmmmk...

Also, I can just about justify an investment in AT&T using one of the most conservative valuation methodologies on the planet alone: the Dividend Discount Model. But, and this is a big BUT, that’s assuming they don’t cut the divvy. If they keep or raise the divvy, it looks like a solid buy.

Sorry had a longer post planned then my food arrived quickly. Messed up my op. Lol


I'll detail it better. It mashes sense to invest in places you pay. I also hold stock on my bank.

It's not a bad strategy. I know investing in BangBros really takes some of the sting out of that line item in the credit card statement.

quote:

---

What kind of expiration for those puts? Just curious as I have been looking into options (selling puts and covered calls).

---

Depending on how you invest, this is often a sound strategy (assuming you own the underlying, which is what the poster means by "covered"). Consider this scenario:

1. I own stock XYZ with a 5% dividend yield. If that yield were ever to drop to 4%, I'd have to sell the stock because I need in excess of 4% worth of income to fund my lifestyle spending in retirement and I could easily find other options which pay >4% for comparable risk.

2. XYZ currently trades at $100, meaning it pays a dividend of $100 x 5% = $5. A 4% yield would equate to a stock price of $5 / 4% = $125.

3. Based on this, I know that if the stock goes to $125 and the dividend isn't raised, I'm going to have no choice but to sell the stock. In other words, my capital appreciation upside is capped. Yet, if I buy a stock without selling a covered call against it, one of the things I'm theoretically paying for is the potential for unlimited upside. This means I'm paying for something (unlimited upside) that I'm not getting (since I'm a forced seller at $125).

4. It makes sense for me to sell covered calls at $125 to rectify this situation. Let someone else compensate you for the potential unlimited upside that you yourself aren't able to enjoy.

You could apply the same logic to "price targets."

quote:

---

What kind of expiration for those puts? Just curious as I have been looking into options (selling puts and covered calls).

---

These are Aug 21s. I sold them several weeks back. 45 days to expiration is my typical entry point. If you have a target price in mind and you wouldn’t mind owning the stock, use that as your strike price = cash covered put.

If you don’t particularly care to own the stock (but would if it’s put to you), use the deltas/probabilities to set your strike price to lessen the chance that it’ll be exercised.

T is a fairly low IV stock (not the best money maker or use of capital), so the 28 just represents what I consider to be an attractive entry price for an *investment*, not a trade.

Hope that helps a little.

I thought this was a good idea in January and February when I was flying and staying in hotels constantly to buy $DAL and $HLT. Did not work out as planned!

Entergy is unique because it has large portions of its total revenue from industrial and commercial customers relative to other utilities, and residential usage isn’t as critical to their profitability. Entergy also has agreements to sell all of its unregulated nuclear plants by 2022, and build 8,000 MW of new generation capacity in its next 5-year capital plan. From all these good plans, they’ve promised to grow earnings AND dividends by 5-7% each per year going forward over the same horizon. (These items are all in the earnings call announcements and/or public filings.)

That’s why I invest in Amazon. Get a little bit back because I’m pretty sure my wife accounts for a percentage or two of their sales revenue

Yeah, it's pretty impressive they've been able to maintain their EPS guidance throughout all of this. As you stated, they are much more leveraged to C&I customers than many utilities and the trend throughout COVID has been an increase in residential load and a decrease in C&I load. You can see that trend intensifying going from Entergy's Q1 y/y weather-adjusted sales volumes to their Q2 y/y weather-adjusted sales volumes, with the net effect being just a 0.8% reduction in weather-adjusted volumes YTD. I'll be looking for an improvement in Q3 vs Q2 y/y weather-adjusted sales volumes as confirmation that the worst impacts from COVID were in Q2.

In fact, having seen now how stable their business has held up during a freak event like a shutdown of the economy, I think it makes sense to complement an underlying long position with some leverage exposure via options. As I'm highly skeptical of the broader market at current levels, my bias is more towards selling puts than buying calls, with the intention of holding any shares put to me in the event of a market sell-off for the long-term.