The recent Baker Hughes Rig Count report indicated that the number of U.S.rigs drilling for oil increased by 10 to 241.The key question for the market right now is whether higher oil prices will lead to increased activity of U.S.oil companies and boost domestic production levels.
Yesterday, EIA reported that U.S.domestic oil production increased from 10.9 million barrels per day (bpd) to 11 million bpd.
If the number of U.S.oil rigs continues to increase, production will also increase which may lead to a rise in inventory levels.
In turn, higher inventories may put pressure on oil prices despite the current bullish mood.
As oil moves to higher levels, it will become increasingly sensitive to news about domestic production and inventory levels.Mass vaccination is still months away, and the challenging situation on the coronavirus front may put some pressure on oil demand in December and the first few months of the next year.
At this point, it looks like U.S.oil companies may quickly react to rising oil prices and boost production in a timely fashion.Gasoline Demand Remains Under Pressure
EIA has recently reported that gasoline demand decreased from 8.26 million bpd to 8.13 million bpd.A year ago, demand for gasoline stood at 9.2 million bpd.
While the decline in demand for gasoline has to be expected at this time of the year, it is obvious that there is no additional progress towards last year’s numbers.
The current gasoline demand pattern is similar to what we have seen at 2019 but the ups and downs are taking place at much lower levels.
Most likely, gasoline demand will not be able to get back to the previous normal state without normalization of the coronavirus situation in the U.S.which is not expected until the rollout of vaccines.
During the recent rally, oil traders ignored any negative near-term developments and focused on positive vaccine news.
However, it remains to be seen whether they will remain optimistic at higher oil price levels if demand continues to decline.Story continues
For a look at all of today’s economic events, check out our economic calendar .
This article was originally posted on FX Empire More From FXEMPIRE: 3 EV Stocks to Buy as the Sector Charges Up An overheated EV market is ushering in a cadre of new stocks which investors may want to steer clear of in the near term.Although the sector is red hot, plenty of these companies could leave investors feeling like crash test dummies.Want to avoid that fate? With that in mind, we will look at three EV stocks to buy that will keep you buckled in.
Although novel coronavirus vaccine plays like Pfizer (NYSE:PFE) and AstraZeneca (NASDAQ:AZN) have been soaring, nowhere has the market action been hotter than in EV stocks.To be fair, the price action doesn’t rival the dot-com bubble or what happened in cannabis stocks and cryptocurrencies in the last couple years.
Nevertheless, this month’s surge in momentum has the earmarks of a car wreck in the making for portfolios overly exposed to this area within the broader alternative energy market.InvestorPlace – Stock Market News, Stock Advice & Trading Tips Blame the over-the-top price action on what you will.
President-elect Joe Biden is a great place to start.But that doesn’t matter right now.The bottom line is that all stocks correct.And in those more bearish cycles where a decline of 30% is common after a big run up, largely unproven EV stocks pose an even greater risk.
10 Best Stocks to Buy for Investors Under 30 In the following, let’s look at three leading EV stocks, their price charts and how to park capital into each more smartly.Tesla (NASDAQ:TSLA) Plug Power (NASDAQ:PLUG) Nio (NYSE:NIO) EV Stocks to Buy : Tesla (TSLA) Source: Chart by TradingView The first of our EV stocks to buy is Tesla.We’re starting off with training wheels in TSLA.Aside from the confidence which comes from buying into the EV market leader, the run-up in shares this month is also much less problematic.Not that 30% is anything to sneeze at, but the rally hasn’t been linear like most of its much smaller peer group.Technically, Tesla has staged two recent breakouts.The first was a pattern mid-pivot entry.
A second classic purchase was available as shares cleared a high-level double-bottom base.The latter pattern buy has produced gains of around 10%.It’s slightly out of reach, but a modest pullback and successful test of prior pattern resistance would be sufficient evidence to pull the trigger on this EV stock to buy.Favored Strategy: March $550 / $650 Bull Call Spread on pullback Plug Power (PLUG) Source: Chart by TradingView The next of our EV stocks to buy is Plug Power.
Wait a second! PLUG uses hydrogen fuel cells! That’s true.It’s also fair to say the rubber is already meeting the road in this alternative energy transportation stock.Similar to Tesla, PLUG is an undisputed leader in its EV niche.In this case, Plug’s next-generation forklift technology has A-list customers such as Amazon (NASDAQ:AMZN) and Walmart (NYSE:WMT) in its ranks.
What’s more, key acquisitions made earlier this year should ensure PLUG will meet its ambitious five-year sales and profit plan in the growing hydrogen-based commercial transport market.Technically, Plug Power’s leadership has manifested itself on its price chart.
Even a secondary offering this past week proved to be a very modest bump in the road on its way to gains of more than 70% in November.But as the weekly price chart hints, shares are much closer to being overbought than not.An eventual challenge of the longer-term support zone from roughly $15.50-$19 would be a welcome event.But building a position beneath $21, which allows for a correction nearing 30% with a hedged stock position, looks like a smarter proposition.Favored Strategy: March $18 Married Put after correction EV Stocks to Buy: Nio (NIO) Source: Chart by TradingView China-based Nio is the last of today’s EV stocks to buy.The outfit has been on tear in recent weeks and improving its massive run of the past six months.
It’s up nearly 80% in November and more than 1,160% in 2020.Earnings, monthly deliverables, maybe an end to Covid-19 and consumers hitting the road en masse or friendlier U.S.-China relations? It’s all been good for NIO stock investors.
Maybe a bit too good.Technically, Nio is the stock which has the most signs of a price chart running on fumes.Stochastics are overbought and nearing a bearish crossover.And the past seven weeks have seen shares clinging and jumping through the EV stock’s upper Bollinger Band.With a doji decision candle forming on the weekly, a failure of its momentum-driven trend of the past couple months looks likely.Looking forward, a picture-perfect corrective move of 30% would put shares of this leading EV stock at $40.
That might seem like an impossibility for today’s buyers.Yet if history simply rhymes, the odds of a larger bearish decline shouldn’t be dismissed.At the same time, calling a top is risky business in a stock of Nio’s caliber.Fortunately, stock investors have a fix to safely stay the course during a potential detour or conversely, profit if shares continue to motor higher.Favored Strategy: January $45 / $65 Collar On the date of publication, Chris Tyler held, directly or indirectly, positions in Nio (NIO), Plug Power (PLUG) and their derivatives, but no other securities mentioned in this article.Chris Tyler is a former floor-based, derivatives market maker on the American and Pacific exchanges.The information offered is based on his professional experience but strictly intended for educational purposes only.Any use of this information is 100% the responsibility of the individual.
For additional market insights and related musings, follow Chris on Twitter @Options_CAT and StockTwits.More From InvestorPlace Why Everyone Is Investing in 5G All WRONG Top Stock Picker Reveals His Next 1,000% Winner Radical New Battery Could Dismantle Oil Markets The post 3 EV Stocks to Buy as the Sector Charges Up appeared first on InvestorPlace.2d ago Dow Jones futures fell Thursday as AstraZeneca said it’ll likely run another coronavirus vaccine study.A key gauge suggests investors are getting excessively bullish.
7h ago 2 Stocks Flirting With a Bottom; Analysts Say ‘Buy’ When a stock starts dropping, investors have to ask two questions.First, why it’s dropping? Is something wrong with it? Or is it just facing a storm of circumstance, but is otherwise sound? If the latter, then the second question comes into play.
Has this stock hit bottom?When a sound stock hits bottom, that’s a signal for investors to buy in.You can’t go wrong buying low and selling high, but you do have to know when ‘low’ is happening – otherwise you can miss your chance to maximize the profits.Wall Street’s analysts make their reputation by calling stocks right.
Lately, some of these analysts have been tapping several apparent down-and-out equities as prime candidates for strong gains.These are stocks that, based on the TipRanks data, fit a profile: each has fallen on hard times during 2020; each has an average upside that starts north of 40%, and each has at least one analyst saying it’s likely to make radical gains in 2021.Benefitfocus (BNFT)We’ll start in the world of benefits management, an important sector that impacts a number of fields.Employers, insurance brokers, health plans, and retail partnerships all offer benefits to consumers of various stripes – and Benefitfocus offers a tech solution to make benefit administration easy.The company offers a software platform specifically designed to handle the HR and data aspects of benefits programs, from enrollment to management.This niche can be a two-edged sword, however.In good times, with benefit programs swinging, everyone will want in – but in bad times, Benefitfocus has found itself unable to regain traction.
The company’s stock is down 42% year-to-date, and the third quarter results showed continuing year-over-year losses.Revenue is down 11% yoy, to $63.6 million, with declines across all of the company’s main segments: software revenue, subscription revenue, and platform revenue.At the same time, there were positive developments.Lincoln Financial Group and PayActive joined Benefitfocus as catalog suppliers, and the company held its first open enrollment with the University of Texas system.The company also ended Q3 with $176 million in cash on hand.These quarterly results came as Benefitfocus brought in new management.The company announced Stephen Swad as the new CEO, with his CFO position being filled by Alpana Wegner.In addition, the company announced new hires for the Chief Data Officer and EVP, Product & Engineering positions.These are major moves, that portend a new outlook at the top.Covering this stock for Piper Sandler, 5-star analyst Sean Wieland writes of BNFT: “With new mgmt at the helm, we sense a renewed energy moving the business forward.
SaaS offerings are an area of focus, going head first into the B2B2C channel while de-emphasizing the direct to consumer business.Health of this customer base continues to trend above expectations, with a positive benefit fromgig workers, increasing net eligible lives 8.3% y/y to 18.2M.OEP fits into this positive narrative, as mgmt is happy with progress thus far, seeing continued strength as the selling season progresses.”Wieland’s bullish outlook is also supported by his Overweight (i.e.Buy) rating and $29 price target, which implies a 132% one-year upside.
(To watch Wieland’s track record, click here)Overall, Wall Street appears to be in agreement with Wieland on BNFT.The stock has a Strong Buy consensus rating, based on 3 Buy reviews and 1 Hold.
Shares are selling for $12.50 and the average price target, at $17.67, suggests room for a 41% upside in the next 12 months.(See BNFT stock analysis on TipRanks)Momo, Inc.(MOMO)Next up is Momo, the Chinese social media mobile app.This company offers customers a free smartphone app for social posting and instant messaging, and monetizes the service through the usual routs of third-party services and paid subscriptions for upgrades.Momo has badly underperformed this year, however, having lost 54% year-to-date.The company’s fiscal third-quarter came in below expectation, with earnings at 30 cents per share and revenues at $3.9 billion.These numbers were down significantly year-over-year, especially the EPS, which showed a 40% yoy drop.
Revenue and earnings peaked in 4Q19, as the corona virus started to break out – and its has yet to recover.Like BNFT above, Momo has had management changes in the calendar third quarter.The company brought on board a new Executive Chairman as well as a new CEO.It is hoped that the new blood will bring new energy at the top.The new CEO, Li Wang, previously served as company COO since 2014.Leo Chiang, of Deutsche Bank, acknowledges that Momo is in a tight spot, but believes the company can chart a course out.
“Momo app is navigating to focusing on content ecosystem, user engagement and community activity to revitalize middle and long tail users, instead of exploiting top paying cohort, whose spending sentiment has been impaired significantly post pandemic.The process has begun in early August and management expects it to last for 6 months.We believe it could lead to a healthier long-term prosperity for a social app,” Chiang noted.Chiang sets a $25 price target here, indicating a possible 68% upside potential, to go along with his Buy rating.(To watch Chiang’s track record, click here)The analyst consensus here is a Moderate Buy, based on 8 reviews that include 3 Buys and 5 Holds.
The stock’s average price target of $21.49 suggests a 45% upside from the current share price of $14.83.
(See MOMO stock analysis on TipRanks)To find good ideas for beaten-down stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.Disclaimer: The opinions expressed in this article are solely those of the featured analysts.The content is intended to be used for informational purposes only.It is very important to do your own analysis before making any investment.2d ago 7 of the Best Cheap Stocks for December Stocks can be cheap for a number of reasons and not all cheap stocks always offer value.Therefore, investors need to do due diligence to find bargain stocks that could also bring solid returns.Today’s article introduces seven of the best cheap stocks that also offer value.Over 80 years ago, economist Benjamin Graham, who later inspired Warren Buffett, among others, first put forward the idea of investing in shares that sold at a discount to their intrinsic value.
Markets have had an incredible run-up since the lows hit in mid-March.Thus, it may feel as it there are no bargains to be found in the universe of robust shares.However, our markets are large and diverse enough to offer solid companies that are selling at discounts.
Many such companies typically offer stable dividends, too.InvestorPlace – Stock Market News, Stock Advice & Trading Tips Investors should ideally not overpay for a firm’s growth potential.With that information, here are seven of the best cheap stocks for December: 10 Best Stocks to Buy for Investors Under 30 AT&T (NYSE:T) Cisco (NASDAQ:CSCO) CVS Health (NYSE:CVS) FedEx (NYSE:FDX) Fulgent Genetics (NASDAQ:FLGT) International Game Technology (NYSE:IGT) PPL (NYSE:PPL) AT&T (T) Source: Jonathan Weiss/Shutterstock 52-Week range: $ 26.08 – $39.55 Dividend yield: 7.12% Our first stock on this list of cheap stocks is Dallas, Texas-based tech group AT&T, which has global operations in telecommunications, media and entertainment.So far in 2020, T shares are down over 25%, pushing the dividend yield to over 7%.A juicy payout is an important reason for the continued interest in the stock.AT&T reported Q3 earnings in late October.
Consolidated revenues of $42.3 billion showed a decline of 5.1% YoY.Five main segments contribute to revenues: Mobility (revenue up 1.1% YoY); Entertainment Group (revenue down 10.2% YoY); Business Wireline (revenue down 2.5% YoY); WarnerMedia (revenue down 10% YoY); Latin America (revenue down 19.3% YoY).Quarterly adjusted net income of $2.8 billion means EPS of 76 cents.In the year-ago quarter, comparable metrics had been $3.7 billion and 94 cents.Free cash flow was $8.3 billion.CEO John Stankey said, “Our strong cash flow in the quarter positions us to continue investing in our growth areas and pay down debt.We now expect 2020 free cash flow of $26 billion or higher with a full-year dividend payout ratio in the high 50s%.” We believe the shares offer an opportunity for both capital appreciation and passive income.Cisco (CSCO) Source: Sundry Photography / Shutterstock.com 52-Week range: $32.40 – $50.28 Dividend yield: 3.38% San Jose, California-based Cisco focuses on networking, communications, security, collaboration, and the cloud.
The tech giant helps customers transport data, voice and video traffic.The group reported FY21 Q1 in November.
Revenue was $11.9 billion, a 9% decrease of YoY compared to $13.2 billion.Non-GAAP net income was $3.211 billion, representing a diluted non-GAAP EPS of 76 cents.Last year, the respective numbers had been $3.6 billion and 84 cents.
Net cash flow provided by operating activities in the quarter was $4.1 billion.Chuck Robbins, chairman and CEO, was pleased with results.
CFO Kelly Kramer commented: Our Q1 results reflect good execution with strong margins in a challenging environment.We continued to transform our business through more software offerings and subscriptions, driving 10% year over year growth in remaining performance obligations.We delivered strong growth in operating cash flow and returned $2.3 billion to shareholders.In past quarters, Cisco has, at times, found it difficult to grow its top line and its stock price has reflected the growth challenge.Nonetheless, transformation efforts are well underway as management diversifies into software and cloud support services.
7 Value Stocks That May Come Back into Style After the Pandemic Future quarters are likely to see top-line increases from recurring, high-margin, cloud-related and subscription services.CVS Health (CVS) Source: Jonathan Weiss / Shutterstock.com 52-Week range: $52.04 – $77.03 Dividend yield: 2.92% Rhode Island-based CVS Health is an integrated pharmacy healthcare company.As the parent company of CVS Pharmacy, it is the largest pharmacy services group stateside.Since this spring, it has been offering Covid-19 testing in 4,000 CVS Pharmacy locations.
CVS Health operates through three segments: Pharmacy Services, Retail/LTC and Health Care Benefits.
In early November, it released Q3 results.Revenue totaled $67.1 billion, up 3.5% YoY.The increase was driven by growth in the Health Care Benefits and Retail/LTC segments.
Adjusted earnings per share was $1.66.A year ago, it was $1.84, a 21% decrease from $1.17 during the same period of the previous year.
Net income also decreased 20.3% to $1.22 billion.Management increased the full year 2020 adjusted EPS guidance range to $7.35-$7.45 from $7.14-$7.27.Cash flow from operations guidance range was also increased to $12.75 billion-$13.25 billion from $11 billion-$11.5 billion.As of this writing, forward P/E and P/S ratios are 8.79 and 0.33, respectively.We find CVS shares undervalued and would look to buy the dips in this integrated healthcare powerhouse.
FedEx (FDX) Source: Antonio Gravante / Shutterstock.com 52-Week range: $88.69 – $293.30 Dividend yield: 0.89% Memphis, Tennessee-based FedEx offers transportation and logistics services worldwide.FedEx delivered robust FY21 Q1 results in mid-September.Total non-GAAP revenue for was $19.3 billion and increased 13.5% YoY.Adjusted non-GAAP income was $1.28 billion and increased 60% compared to same period FY20 ($800 million).Non-GAAP diluted EPS came at $4.87.
Management highlighted, “Operating results increased due to volume growth in FedEx International Priority and U.S.domestic residential package services, yield improvement at FedEx Ground and FedEx Freight, and one additional operating weekday.These factors were partially offset by costs to support strong demand and to expand services.” Put another way, the effect of the pandemic has so far been mixed on the results.Investors also noted various ongoing costs related to the integration of TNT Express, which FedEx acquired in mid-2016.These costs affect the GAAP results reported and will continue to do so for several more quarters.
7 Weak-Looking SPACs to Avoid Right Now The company is likely to benefit from sales around the holiday season as well as international shipments.If you believe that increased e-commerce activity will continue to affect parcel carriers like FedEx positively, you should keep the shares on your shopping list of cheap stocks.Fulgent Genetics (FLGT) Source: Connect world / Shutterstock.com 52-Week range: $6.70 – $52.47 Dividend yield: N/A Founded in 2011, California-based Fulgent Genetics develops flexible and affordable genetic testing, such as cancer, neo-natal, and pre-natal screening.
Its tests can also be customized as per customer requirements by combining next generation sequencing (NGS) with its technology platform.In recent weeks, it also started offering FDA-authorized Covid-19 testing solutions to businesses and schools.Fulgent Genetics released Q3 results in early November.Record revenue of $101.7 million meant an increase of 883% YoY.Non-GAAP income for FY20 Q3 was $49 million and non-GAAP diluted EPS were $2.08 per share.Paul Kim, CFO, cited, “Our third quarter results represent a meaningful inflection point in our business, with our test volume growing almost 5,000% year over year and revenue growing almost 900% … finally, we recorded deferred revenue of approximately $18 million as of September 30, 2020.” Investors were pleased with these robust top-line and bottom-line metrics.
FLGT stock is up significantly from the lows seen in early spring.However, the business is not yet richly valued and we would look to buy the dips in this genetic screening company.In the coming quarters, Fulgent Genetics could also become a takeover candidate.International Game Technology (IGT) Source: Shutterstock 52-Week range: $3.59 – $15.56 Dividend yield: 5.96% The next stock on this list of cheap stocks comes from the other side of the Atlantic.London-headquartered International Game Technology manufactures and sells computerized gaming equipment and software, including slot machines, interactive gaming machines, and lottery technology.The company works with governments and regulators in over 100 countries.
The group announced Q3 results in November.Consolidated revenue was $982 million and decreased 15% YoY.International Game Technology reports revenue in two segments: Global Lottery (quarterly revenue up 3% YoY); Global Gaming (quarterly revenue down 31% YoY).Adjusted net income was $54 million and increased 25%.Adjusted net income per diluted share were 26 cents compared to 21 cents in the prior year.The company also delivered $220 million in positive free cash flow in the quarter.
CFO Max Chiara commented: “Robust cash flow generation during the quarter and year-to-date periods have enabled us to improve our liquidity and reduce net debt… [T]he improvement in our profitability should support our continued focus on reducing debt.” 7 Upcoming IPOs to Watch Heading Into 2021 During the quarter, the group signed 2-year contract extension with New York Lottery.The continued re-opening of casinos and betting establishments should provide further tailwinds for the shares.
However, a potential pullback toward $11 would improve the margin of safety.
PPL (PPL) Source: Shutterstock 52-Week range: $18.12 – $36.83 Dividend yield: 5.41% Headquartered in Allentown, Pennsylvania, PPL Corporation is a utility group providing energy services to more than 10 million customers in the U.S.and the U.K.The company generates electricity from power plants in Kentucky.PPL released Q3 results in early November.Revenues was $1.89 billion, a 2.5% decline from $1.93 billion during Q3 2019.Three segments contribute to revenues, namely U.K.Regulated, Kentucky Regulated and Pennsylvania Regulated segments.
Adjusting earnings were $450 million, or 58 cents per share.A year ago, they had been $445 million, or 61 cents per share.
Vincent Sorg, president and CEO said: While COVID-19 and milder weather through the first half of the year have impacted PPL’s ongoing earnings, we are on track to achieve the low end of our earnings guidance and have narrowed our 2020 guidance range to $2.40 to $2.50 per share from the prior range of $2.40 to $2.60 per share.Earlier in the year, management announced plans to sell the U.K.
business, a large contributor to the operations.Such a sale would enable PPL to pay down long-term debt or buy U.S.-based assets.Therefore, potential investors may want to keep an eye on the developments.Nonetheless, we like the shares for the long-run.
On the date of publication, Tezcan Gecgil did not have (either directly or indirectly) any positions in the securities mentioned in this article.Tezcan Gecgil Ph.D.has worked in investment management for over two decades in the U.S.and U.K.
In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination.More From InvestorPlace Why Everyone Is Investing in 5G All WRONG Top Stock Picker Reveals His Next 1,000% Winner Radical New Battery Could Dismantle Oil Markets The post 7 of the Best Cheap Stocks for December appeared first on InvestorPlace.2d ago Forget the Vaccine, Buy Pfizer Stock for Its Impressive Cash Flow If this month’s earth-shattering vaccine news from Pfizer (NYSE:PFE) has you thinking about buying the stock because it’s destined for monster gains – think again.PFE stock is not a growth play.
Source: Manuel Esteban / Shutterstock.com It’s a cash-flow vehicle.But don’t take my word for it.Let the market be your guide.The tribe immediately rejected Pfizer’s bid to run wild after the news hit.InvestorPlace – Stock Market News, Stock Advice & Trading Tips The message was clear.
Stick to your lane, little stock.You’re a high dividend-paying, stable security with a history of enriching shareholders through those delicious quarterly checks.Perhaps someday your price chart will evolve into a rip-roaring uptrend, but not today.10 Best Stocks to Buy for Investors Under 30 By itself, this doesn’t mean PFE is not a great buy.
It’s a wonderful candidate for income seekers.But, as I said, if you’ve come in search of rapid price appreciation, I fear you’ll be disappointed.A Closer Look at PFE Stock Source: The thinkorswim® platform from TD Ameritrade The S&P 500 sports a dividend yield of 1.48% and should be considered our baseline.Companies that offer payouts north of 1.48% are officially interesting as income-generating candidates.Those that offer less aren’t worth your time.
So, how does Pfizer compare to the S&P? It’s nearly three times higher at 4.2%.When you boast a steady income stream of that magnitude, well, you can be forgiven for not leaping higher with every market rally.Of course, it would be nice if income generators also grew over time.And, to be fair, PFE has had modest growth over the past decade.But in recent years, the lion’s share of the return has come via quarterly dividends.
Now, if you want to juice the return, there are two options available.First, you can amp up the leverage by purchasing shares on margin.Suppose, for instance, instead of committing 100% of the stock cost, you only put up 50% of it.The dividend yield of 4.2% would then double to 8.4%.
In other words, the traditional investor would pay $3,620 for 100 shares of stock to acquire the annual dividend of $1.52.Purchasing shares on margin, by contrast, would only require $1,810 for 100 shares, thus getting access to the yearly payout of $1.52.Buying on margin, however, is not without its risks.It’s a double-edged sword that can accelerate gains and losses.
For example, a 50% loss in PFE stock would create a 100% loss of your capital if you acquired shares with two to one margin.A second alternative for enhancing yield lies in the options market with covered calls.
Pfizer Stock Options Beckon Perhaps the most glaring difference between the margin route and using covered calls is leverage.While buying on margin increases risk, selling covered calls decreases it.You’re attempting to enhance your returns by making monthly promises to sell your stock at a particular price rather than buying with borrowed money.This should appeal more to the conservative, risk-averse investor.The covered call goes by many names, including a buy-write, covered stock, and covered write.Regardless of your preferred moniker, it’s a strategy that consists of buying 100 shares and selling one call option.You get paid a premium in exchange for obligating yourself to sell shares.Typically, traders sell one-month, out-of-the-money options.
This allows you to profit on the stock before you have to relinquish your shares.Additionally, the shorter time frame translates into a higher rate of time decay and more flexibility in modifying the strike price from month to month.With PFE at $36.20, you could purchase 100 shares and sell the Dec $38 call for 55 cents.As long as the stock remains below $38, you’ll pick up an extra $55 in income for the next 24 days.
And if Pfizer does push above $38, then you’ll have to sell the stock, thereby capturing another $180 of profit ($38 – $36.20, x 100 shares).Here’s the bottom line.Pfizer is an attractive cash-flow stock, but covered calls can make it even better.On the date of publication, Tyler Craig did not have (either directly or indirectly) any positions in the securities mentioned in this article.
For a free trial to the best trading community on the planet and Tyler’s current home, click here! More From InvestorPlace Why Everyone Is Investing in 5G All WRONG Top Stock Picker Reveals His Next 1,000% Winner Radical New Battery Could Dismantle Oil Markets The post Forget the Vaccine, Buy Pfizer Stock for Its Impressive Cash Flow appeared first on InvestorPlace.2d ago.