Ronald | Income from Stocks

If selling options feels complicated, start here. Pick a stock you would actually buy. Have the cash for 100 shares. Sell a put below today's price. If it stays up, you keep the money. If it drops, you own it at a lower price and still keep the money. You just have to start.

$NVDA reports next Tuesday. Want a hint? $TSM just posted its biggest month ever. October revenue up almost 60% YoY. Nvidia is TSMC's biggest customer. You don't always need a company's books to see what's coming. Sometimes you just look at who makes the product.

Last Thursday, it felt like AI was ending. My $NVDA $220 puts were deep in the money. Assignment was a real possibility. Owning NVDA was still fine with me. I wanted more time to process everything before committing to it. So I tried something I call the slow roll. It has two steps. Step one: close the puts and take the loss. That decision was easy because the premium I've collected on NVDA this year more than covers that loss. Without that cushion, I probably wouldn't have done it. Step two: wait for a better moment to sell new ones. Friday, NVDA bounced. Felt like I had made a huge mistake. Then the weekend news hit, and this morning NVDA dropped. That was my moment. I sold the December $215 puts. My strike dropped from $220 to $215, and I collected an extra $1,698. If NVDA had kept climbing, this would have backfired. Earnings on the 17th will be the next test.

I own 500 shares of $VST. Paid $140 for them. They're trading at $131 today. This morning, someone paid me $3,580 for a simple deal: If they want my shares before January 15, they get them at $140. No matter how high VST goes. Their hope? VST rockets way past $140. If that happens, I sell at exactly what I paid. And that $3,580 never leaves my account. Would you take this deal?

The market is pricing $DRAM like memory is over. But we know what the end looks like. Prices crash. Chips pile up unsold. Companies cut spending. Here is what the top 3 holdings just reported: Samsung: 2027 HBM supply already sold out. SK Hynix: over half of 2027 and 2028 capacity already booked. Running 80% operating margins. Micron: customers paid $32B upfront just to get in line. Sold out. Booked. Paid upfront. That’s not what the end looks like.

June 2024. A bar in Taipei. A woman tells a tech executive she can get $NVDA CEO Jensen Huang to come over. He actually shows up. They have drinks. Someone takes a photo. It gets posted on LinkedIn. Her name? Alice Huang, a senior executive linked to an NVIDIA customer. At the time, just another night out with tech executives. Two years later, US intelligence reportedly suspects her of spying for China, and she's at the center of an affair scandal involving Jensen Huang. That LinkedIn photo has aged VERY differently. And something tells me we've only scratched the surface of this story.

This week made me realize my options account is more exposed to AI related themes than I'd like. As options sellers we get pulled into those names because that's where the premium is. So I went looking for non-AI names that still pay decent premium and whose business is doing well right now. Every one of these beat or raised guidance in its last earnings report, and none of them reports again in the next month. Health $LLY: revenue up 39% and raised guidance $UNH: beat and raised $OSCR: raised guidance for the third time this year Travel $RCL: beat and raised $CCL: record quarter and raised outlook Fintech $SOFI: raised guidance, over 17M members $XYZ: third straight guidance raise Gold and copper $AEM: beat with strong free cash flow $NEM: beat on higher gold prices $FCX: beat with strong cash flow Consumer $EL: beat and raised again $ELF: sales up 51% $DASH: revenue up 34% Streaming $SPOT: beat its own guidance, 306M subscribers WMT, DG, DLTR and IOT (one of my favorites) are on my list too, but they haven't reported earnings for this season yet so will wait after. Some of these stocks are still well off their highs even with strong numbers, so I would only sell puts on the ones I'm happy to own. Which ones are on your list? Looking for more ideas.

Investing has ruined me. Normal people: who is that celebrity dating? Investors: who is the Nvidia CEO dating? Normal people: argue over a $40 dinner. Investors: get mad at Zuckerberg’s spending. Normal people: don’t know what KOSPI is. Investors: check it before brushing their teeth. Normal people: worry about their own loans. Investors: worry about a data center’s loans. Normal people: wake up and check their texts. Investors: wake up and check pre-market. Normal people: listen to podcasts for fun. Investors: listen to earnings calls for fun. Normal people: check the weather Sunday night. Investors: check futures Sunday night. Normal people: buy more when things go on sale. Investors: panic when stocks go on sale.

Here is what I did with those 2,000 $DRAM shares. Got assigned at $59. Normally I would sell calls at the price I paid. But the stock was so far below $59, those calls paid very little. So I had a few choices. Wait for a bounce. But I don’t know when that comes, and I try not to time the market. Sell and move on. But I still believe in the memory story. Or do nothing, which I seriously thought about. Here’s what a lot of people miss. I added up all the premium I’ve collected on DRAM. That brought my breakeven on the whole campaign down from $59 to about $46.40. Suddenly a $50 strike made a lot more sense. Sold 20 calls for January. Collected $3,260, which brings that breakeven down to about $44.79. The trade-off: if memory rips back above $50, I miss that part of the move. If it gets called away, I’m still up on the whole campaign. If I’d rather keep the shares, I can roll the call when we get there. For now I'll just wait and see.

$VST has been a frustrating stock to own. A year ago it was around $180. Today it’s $126. Back in May I sold puts at $140 and got assigned. Since then I’ve been selling calls on it. The stock is down from where I bought it. But it’s paid me $10,713 along the way. So I’m still up on a stock that went down.

Expiration Friday and not many positions this week I only sold calls on $VST and didn't do anything else because of the election The VST calls look set to expire worthless. We go again next week.

Woke up to 2,000 shares of $DRAM. My put still had 2 weeks left. Yes, you can get assigned early. It usually happens when: The put is deep in the money. There’s almost no time value left. Mine was both. I was fine owning it. Next step for me is selling calls on it.

Who would you rather be right now?

Not a great day for many portfolios. Especially if you have a lot of AI related stocks. But on days like this, I go through my holdings and ask myself one question. Would I still buy this today? If yes, I hold. And if you sold covered calls, at least something in your account is green today.

Another busy week, but I managed to sell this call today. I bought $VST at $140 back in May. Today I offered to sell it at that same price by Friday, and got paid $3,091 for it. Vistra reports earnings Friday, which is why it paid so well. No other new trades for me this week. I’m waiting until after the election.

Missed my usual expiration Friday post yesterday. Work has been crazy this week. I’m in cybersecurity, and there’s been a lot going on. Anyway, two positions expired worthless. $IOT puts and $VST calls. $5,677 in premium. Kept 100% of it. And I still own my VST shares. Not every position went my way. I rolled my $RDDT puts, and some of my stocks I own right now have dropped significantly. It's all part of the game. Looking forward to Monday