Thursday, June 12, 2014

In a down market look for covered calls GLNG

GLNG (Photo credit: Wikipedia)
Often times when the market is down volatility is up.  Indeed the measure of volatility, the VIX, is up a touch today at about 12.38.   Don't read too much into that as anything under 16 is still considered to reflect low volatility.

The trade today for high risk income investors is Golar LNG limited, symbol GLNG.   I have written about this stock before.   GLNG is not a Dividend Machine because the stock's earnings are all over the place.   It has paid consistent and increasing dividends since 2010.

When the market is down options traders figure they can get into a stock cheap.   This is not an investment strategy it is a trading strategy.   We income investors try to use their trading to our advantage and sell covered (I emphasize) covered calls on stocks that pay a dividend.  GLNG is one of these stocks.

I play this stock with covered calls; today they are quite nice.   Below is the call I sold today on some of my GLNG.    Please proceed with caution.