Heady Call Option Income Flows from High-Tech Stocks

Bryan Perry

A former Wall Street financial advisor with three decades' experience, Bryan Perry focuses his efforts on high-yield income investing and quick-hitting options plays.

The rally has run into some overhead resistance from the escalation of the trade war with China, the S&P is trading at the high end of the price-to-earnings (P/E) range (currently 17X) and we’re heading into the summer months where the market historically has under-performed. At the same time, there is tremendous sales and earnings power within the software sector that is fueling continuous gains in many big-cap Software as a Service (SAAS) companies that operate under the recurring revenue subscription business model.

This past week, when the market saw a selling climax on Thursday morning, it was the SAAS software stocks that were on the receiving end of the most aggressive buying interest. Stocks like Workday Inc. (WDAY), Salesforce.com (CRM), Twilio Inc. (TWLO), Adobe Systems (ADBE) and Autodesk Inc. (ADSK) all reversed sharply higher when the market caught a bid. For traders, this is a strong sign of where the focus of trading capital should target going forward. It’s also where professional money is active.

I oversee two services that utilize a proactive covered-call strategy that focuses on big-cap high-tech stocks. One of them, Quick Income Trader, utilizes a two-step process. First, we buy the underlying stock and place a limit order on an out-of-the-money call option that expires one to several months out at a price that is considerably higher than where the call is presently trading. The expectation is for the underlying stock to rally to a level where the call appreciates enough to trigger the limit order on the call option.

The objective is to generate returns of 10%-15% over 30 to 60 days. We have up to seven trades at work at any given time, affording diversification while raising the odds of producing income that makes a meaningful difference in the portfolios and lives of those that put this strategy to work.

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Lately, subscribers to Quick Income Trader have benefited from targeted covered-call strategies in cyber security, 5G and digital advertising stocks. While I am attempting to find stocks within these hot spaces that trade under $80 per share, this is becoming harder to do since many of the market leaders trade at well over $100. Buying more expensive stocks ties up considerably more capital, but if that is where the best risk versus reward ratios can be managed, then it is reasonable to go where the money can be best made.

I invite those who are seeking income, total returns and exposure to what is arguably the hottest sector within the entire stock market to check out Quick Income Trader. Boost your portfolio income stream with high-tech powerhouse stocks! This approach is an excellent strategy to put to work today within the current market landscape as it offers the best of both worlds: stealth bull stocks and fantastic income.

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Hilary Kramer warns her readers to not get spooked by the U.S.- China trade dispute. She is confident that it will resolve soon and argues to "not sell in May when the catalysts stack upside."

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