Thursday, August 16, 2012

Gimme MO

Gator's Chart of the Day: MO
It's not a rocket stock but it is low maintenance and pays a good dividend.  Yield is currently 4.67% (2.5x the US 10 Year Note) and the company just reported earnings July 24th.  If you bought every time price touched the 50 day simple moving average you would be doing just fine.

The Trade
This section should be called The Buy because there isn't much of a trade as we usually think of it.  Buy what you want and put a stop a couple of points under the 50 day sma for capital preservation in flash crash purposes and wait for the dividend check.

If that's just too boring then sell upside covered calls against the stock you buy to juice your return.  You could sell a Dec37 for .30 ($30 for each 100 shares you own) and effectively double your return.  Just do it again when they expire.