Please ensure Javascript is enabled for purposes of website accessibility
Fundamentals
Realistic Strategies, Realistic Returns

January 5, 2024

Okay, now that we have initiated all the Small Dogs positions, I’m going to place trades on the remaining five Dogs of the Dow positions.

Cabot Options Institute Fundamentals – Dogs of the Dow Alert (MMM, AMGN, IBM, JNJ, CVX)

Okay, now that we have initiated all the Small Dogs positions, I’m going to place trades on the remaining five Dogs of the Dow positions.

  • 3M (MMM)
  • Amgen (AMGN)
  • International Business Machines (IBM)
  • Johnson & Johnson (JNJ)
  • Chevron (CVX)

As always, if you have any questions, at any time, please do not hesitate to email me at andy@cabotwealth.com.

The Trades

3M (MMM)

MMM is currently trading for 108.75.

Here is the trade:

Buy to open the MMM January 16, 2026, 75 call for roughly $38.40. (Adjust accordingly, prices may vary from time of alert.)

MMM.png

Once that occurs (or if you are new to the position and already own LEAPS):

Sell to open the February 16, 2024, 115 call for roughly $1.52. (Adjust accordingly, prices may vary from time of alert.)

COI_F_010524_MMM_calls.png

Premium received: 4.0%

Once the initial LEAPS purchase occurs, we maintain the position and focus on selling near-term call premium against our LEAPS, lowering the original cost basis of $38.40 (or the price at which you purchased your LEAPS) with each and every transaction.

We can continue to sell calls against our LEAPS contract every month or so to lower the total capital outlay. But remember, options have a limited life, so when we get closer to the LEAPS contract’s expiration, we will simply sell the contract and use the proceeds to continue our poor man’s covered call strategy in MMM.

And remember, the 4.0% is just the premium return, it does not include any increases in the LEAPS contract if the stock pushes higher. Moreover, we can continue to sell calls against our LEAPS position for another 8-12 months, thereby generating additional income or lowering our cost basis even further.

An alternative way to approach a poor man’s covered call, if you are a bit more bullish on the stock, is to buy two LEAPS for every call sold. This way you can benefit from the additional upside past your chosen short strike, yet still participate in the benefits of selling premium.

Regardless of your approach, you can continue to sell calls against your LEAPS as long as you wish. Whether you hold a position for one expiration cycle or 12, poor man’s covered calls give you all the benefits of a covered call for significantly less capital.

Amgen (AMGN)

AMGN is currently trading for 300.79.

Here is the trade:

Buy to open the AMGN January 16, 2026, 240 call for roughly $80.20. (Adjust accordingly, prices may vary from time of alert.)

COI_F_010524_AMGN_LEAPS.png

Once that occurs (or if you are new to the position and already own LEAPS):

Sell to open AMGN February 16, 2024, 320 call for roughly $3.00. (Adjust accordingly, prices may vary from time of alert.)

COI_F_010524_AMGN_calls.png

Premium received: 3.7%

Once the initial LEAPS purchase occurs, we maintain the position and focus on selling near-term call premium against our LEAPS, lowering the original cost basis of $80.20 (or the price at which you purchased your LEAPS) with each and every transaction.

We can continue to sell calls against our LEAPS contract every month or so to lower the total capital outlay. But remember, options have a limited life, so when we get closer to the LEAPS contract’s expiration, we will simply sell the contract and use the proceeds to continue our poor man’s covered call strategy in AMGN.

International Business Machines (IBM)

IBM is currently trading for 160.31.

Here is the trade:

Buy to open the IBM January 16, 2026, 125 call for roughly $40.30. (Adjust accordingly, prices may vary from time of alert.)

COI_F_010524_IBM_LEAPS.png

Once that occurs (or if you are new to the position and already own LEAPS):

Sell to open IBM February 16, 2024, 165 call for roughly $2.56. (Adjust accordingly, prices may vary from time of alert.)

COI_F_010524_IBM_calls.png

Premium received: 6.4%

Once the initial LEAPS purchase occurs, we maintain the position and focus on selling near-term call premium against our LEAPS, lowering the original cost basis of $40.30 (or the price at which you purchased your LEAPS) with each and every transaction.

We can continue to sell calls against our LEAPS contract every month or so to lower the total capital outlay. But remember, options have a limited life, so when we get closer to the LEAPS contract’s expiration, we will simply sell the contract and use the proceeds to continue our poor man’s covered call strategy in IBM.

Johnson & Johnson (JNJ)

JNJ is currently trading for 160.95.

Here is the trade:

Buy to open the JNJ January 16, 2026, 135 call for roughly $34.30. (Adjust accordingly, prices may vary from time of alert.)

COI_F_010524_JNJ_LEAPS.png

Once that occurs (or if you are new to the position and already own LEAPS):

Sell to open JNJ February 16, 2024, 165 call for roughly $2.26. (Adjust accordingly, prices may vary from time of alert.)

COI_F_010524_JNJ_calls.png

Premium received: 6.6%

Once the initial LEAPS purchase occurs, we maintain the position and focus on selling near-term call premium against our LEAPS, lowering the original cost basis of $34.30 (or the price at which you purchased your LEAPS) with each and every transaction.

We can continue to sell calls against our LEAPS contract every month or so to lower the total capital outlay. But remember, options have a limited life, so when we get closer to the LEAPS contract’s expiration, we will simply sell the contract and use the proceeds to continue our poor man’s covered call strategy in JNJ.

Chevron (CVX)

CVX is currently trading for 151.76.

Here is the trade:

Buy to open the CVX January 16, 2026, 115 call for roughly $42.20. (Adjust accordingly, prices may vary from time of alert.)

COI_F_010524_CVX_LEAPS.png

Once that occurs (or if you are new to the position and already own LEAPS):

Sell to open CVX February 16, 2024, 160 call for roughly $1.79. (Adjust accordingly, prices may vary from time of alert.)

COI_F_010524_CVX_calls.png

Premium received: 4.2%

Once the initial LEAPS purchase occurs, we maintain the position and focus on selling near-term call premium against our LEAPS, lowering the original cost basis of $42.20 (or the price at which you purchased your LEAPS) with each and every transaction.

We can continue to sell calls against our LEAPS contract every month or so to lower the total capital outlay. But remember, options have a limited life, so when we get closer to the LEAPS contract’s expiration, we will simply sell the contract and use the proceeds to continue our poor man’s covered call strategy in CVX.

And again, as always, if you have any questions, please feel free to email me at andy@cabotwealth.com.