STOCK SHOWDOWN - Writing Covered Calls - FDX vs UPS

Which stock would I buy for Writing Covered Calls - FDX vs UPS
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DISCLAIMER: This stock comparison is 100% for entertainment. I'm not recommending these stocks as a purchase. The research jump links in this blog post are ones that I use to start my stock investing research. Always do your own due diligence and never risk more money then you are willing to lose. Think of it like this blog post as seeing the world thru my eyes.
COVERED CALL SHOWDOWN! - WHICH STOCK WOULD I PURCHASE TO WRITE A COVERED CALL
FedEx Corporation
	FDX	vs		UPS
United Parcel Service, Inc.
This Showdown pits the GIANTS of the small package shipping industry: FedEx and UPS. No doubt the most recognized names in shipping ... these two companies share many things in common but when we break down the numbers ... one emerges as a better Covered Call candidate for anyone searching for that next great company for writing covered calls. Read below for the key data breakdown
NOTE - AT THE TIME OF THIS POSTING, BOTH COMPANIES STOCK PRICES BELOW
FDX			UPS
$119.08			$102.22
FedEx Corporation			United Parcel Service, Inc.
Just in case you didn't know ... here's some basic company information about what they do.
FedEx Corporation provides transportation, e-commerce, and business services worldwide. The company's FedEx Express segment offers shipping services Fdx Corpor delivery of packages and freight. Its FedEx Ground segment provides business and residential money-back guaranteed ground package delivery services; and consolidates and delivers low-weight and less time-sensitive business-to-consumer packages. The company's FedEx Freight segment offers less-than-truckload and other freight delivery services.			United Parcel Service, Inc. provides letter and package delivery, specialized transportation, logistics, and financial services. It operates through three segments: U.S. Domestic Package, International Package, and Supply Chain & Freight. The U.S. Domestic Package segment offers time-definite delivery of letters, documents, small packages, and palletized freight through air and ground services in the United States.
Yahoo Summary-FDX			Yahoo Summary-UPS
#1 - The Golden Rules of Covered Call Writing!
The Golden Rules of Covered Call Writing are subjective ... the basic idea is to avoid as much risk as possible when determining a new stock purchase for a Covered Call Write ... we can not avoid risk entirely but using certain rules or guidelines will help use reduce that risk during the timeframe we use the stock for selling premium. I've included the most popular rules or guidelines below which include: avoid a company's earnings report, is the company apart of the S&P 500 or Dow Jones?. Does the company have a dividend? Does the company have same store sales reports? Do you want to own the stock? > This list isn't the end all be all list but a starter list for your research and lowering your risk ... but again, we can not avoid risk .
FedEx Corporation			United Parcel Service, Inc.
S&P 500?	OPTIONS?	DIVIDEND?	S&P 500?	OPTIONS?	DIVIDEND?
Confirm	Option Chain-FDX	Verify-FDX	Confirm	Option Chain-UPS	Verify-UPS
They both adhere to some of the principles which are the Golden Rules of the Covered Call Writing ... both are apart of the S&P 500, have weekly and very liquid options and pay a dividend ... which are all very positive for continuing our research on them. No clear winner here in my opinion.
#2 - What story is the chart telling us?
When buying stocks to Write Covered Calls the prime objective is for the stock to trade sideways to higher ... selling premium traders will purchase a stock and sell the Out of the Money strike to collect both the premium and the stock appreciation. I always like to look at a chart and ask the question "what story is this chart telling me?" ... if its trending higher, this is good. If its trending lower, well, I really need to do my research if I'm going to invest in a company that its stock is trending lower.
See Support-FDX			See Support-UPS
As you can see ... the virus 2020 stock market crash has taken its toll on even these great companies ... what I see is UPS's stock chart (at the time of this posting 4/16/2020) has traded ABOVE is resistance for a couple days and that could be new support ... FDX seems to still be trying to find that new support ... what's clear is this ... both companies have been able to rally with the overall stock market and haven't been left to waste ... which suggests Wall Street will buy them. UPS's chart gives them the win here.
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#3 - What are "THEY" saying?
I'm not an expert when it comes to whether a stock is undervalued or overvalued or if its a Buy or a Sell ... so I use some great websites to 'paint a picture' for me. Some will have a stock as a Buy and another will have it as a Sell ... so I usually have 3 or 4 different sources to help me.
FedEx Corporation			United Parcel Service, Inc.
Zacks	Yahoo Prem	AmBull	Zacks	Yahoo Prem	AmBull
SELL	OVERVALUED	SELL	SELL	FAIR VALUED	STAY LONG
Corfirm Rating - FDX	Yahoo Summary-FDX	Trending? -FDX	Corfirm Rating - UPS	Yahoo Summary-UPS	Trending? -UPS
These web site specific trade ideas can be all over the board ... American Bull uses chart indicators and right now it has UPS in more of a positive position ... but that can change with the wind. Zack's has them both at SELL ... and with YahooPrem considering FDX OverValued ... I fear FDX's near term stock story might be something to worry about ... UPS on the other hand ... so without a doubt, UPS wins this showdown ... for now!
#4 - SHOW ME THE MONEY!
Another great visual when quickly trying to determine if this/these are companies we want to own ... remember, we have to own these companies and if the picture isn't telling us a clear picture of a companies prospects then I have to make sure I really do my homework.
Yahoo Summary-FDX			Yahoo Summary-UPS
Both generate serious revenue as we would all expect being the two giants of this industry but earnings seem to be where we need to focus our attention. Seems FDX's earnings have dipped a bit and Wall Street doesn't like that whereas UPS has maintained ... I would go to Yahoo Finance and do a deeper dive on both companies financials before investing in either ... but I see a clear winner here
#5 - What kind of Covered Call profits can we make?
Giving someone the right but not the obligation to take your shares can be very profitable if done correctly ... typically most Covered Call writers will try to make 3% Cash on Cash profit in a 30 day period. Mastering this skill of selling premium can increase your annual returns vs a buy and hold investment strategy. Below is a (1) deviation Out of the Money Covered Call that one might do if they sell premium.
Looking at a 30 day window using (3) deviationS Out of the Money
	THESE ARE NOT REAL TIME! CLICK LINK BELOW FOR THAT			POSTED >	4/16/2020
FDX	Current Price	Strike Price	LAST TRADE	30 day return	Expiration
	$122.29	$120.00	$6.95	3.81%	5/15/2020
	$122.29	$125.00	$4.45	5.85%	5/15/2020
	$122.29	$130.00	$2.76	8.56%	5/15/2020
			THIS IS NOT THE BID OR MID
Check this stocks options here >		https://finance.yahoo.com/quote/FDX/options?p=FDX
	THESE ARE NOT REAL TIME! CLICK LINK BELOW FOR THAT
UPS	Current Price	Strike Price	LAST TRADE	30 day return	Expiration
	$98.69	$101.00	$0.98	3.33%	5/15/2020
	$98.69	$102.00	$0.60	3.96%	5/15/2020
	$98.69	$103.00	$0.25	4.62%	5/15/2020
			THIS IS NOT THE BID OR MID
Check this stocks options here >		https://finance.yahoo.com/quote/UPS/options?p=UPS
I wasn't surprised that FDX has more pricier options and if someone bought a 100 shares at this moment would generate more Covered Call premium then UPS ... its RISK/REWARD in this game because we need to own the stock ... so for me, I have a winner here but YOUR winner really needs to be the stock your willing to hold should a Covered Call trade can against you. I would be ok holding both should the markets/industry or company stuffer short term.
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#7 - "HURRY HURRY, READ ALL ABOUT IT!"
The internet has so many resources for good information on companies ... whether its news, events or just some blogger with a great perspective on a company's prospects ... I love just glancing at the news feeds to get a feel for what's going on with a company I'm researching ... below are some helpful jump links I use.
Seeking Alpha		DivChannel	Seeking Alpha		DivChannel
Alpha Articles Search-FDX		Verify-FDX	Alpha Articles Search-UPS		Verify-UPS
MY WINNER IS!!!
	FDX	vs		UPS
	SCORE		SCORE
	3		6
FOR ME ... UPS is my clear winner in this stock showdown ... I like the larger dividend and its chart tells me a better story ... when we can have some clear chart indicators that we can trade on ... it makes for a better story than others. For me, UPS is telling me a better story.
By now you're probably wondering 'what is this Upgraded CPT Dashboard Subscription?' The majority of the super cool research you see on this blog comes from the UCPT Dashboard and all its functionality. See, it's a Covered Call research spreadsheet that keeps the numbers in front of you whilst you research your next Covered Call stock purchase ... but that is only hald the story ... as a member you get Charts of the Week, CPT's Real Time Trade blogs, Exclusive member video's and stock market commentary emails about 3 times a week ... IF any of that interest you ... I've got a FREE MONTH OFFER waiting for you ... just click over and check it out.
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The BONUS Deeper Dive!
#8 - More number that help us Up Our Game!
I'm not an expert when it comes to whether a stock is undervalued or overvalued or if its a Buy or a Sell ... so I use some great websites to 'paint a picture' for me. Some will have a stock as a Buy and another will have it as a Sell ... so I usually have 3 or 4 different sources to help me.
FFTY	ST50	S&P 500	FFTY	ST50	S&P 500
		YES			YES
Does either of these companies have Earnings Report (next 30 days)
April 16, 2020		>		May 16, 2020
~	Jun 24, 2020 - Jun 24, 2020		~	Apr 28, 2020 - Apr 28, 2020
Verify-FDX			Verify-UPS
Dividend 2%	EX-DATE	Ave Vol	Dividend 2%	EX-DATE	Ave Vol
2.73%	Mar 06, 2020	3.261M	3.76%	Feb 24, 2020	5.552M
Verify-FDX			Verify-UPS
What story is the chart telling you?
StockCarts	Finviz	BarCharts	StockCarts	Finviz	BarCharts
View Chart-FDX	See Support-FDX	View Chart-FDX	View Chart-UPS	See Support-UPS	View Chart-UPS
I hope you enjoyed this Covered Call Stock Showdown blog ... as always you know this is for entertainment and before EVER investing a nickel of your hard earned money you need to do your research or what they call due diligence ... no, nada, zip zilcho stock recommendations were made here ... this ALL should be your STARTING POINT for determining if either of these companies meet your stock investing risk profile. Good luck everyone!
Disclaimer - No - at the time of this posting I do not have a position in this equity. I will not take a position in this equity for 3 days of this equity as to not front run for this equity.
Remember, the content of this site is for informational and educational purposes only. If you invest using information contained here, do so at your own risk. Please read the full disclaimer posted below and visit cptdashboard.com for my privacy policy.
Trading stocks and options have risk. Required reading prior to placing money at risk with options is the ODD which is posted below. "The Characteristics & Risks of Standardized Options" Prior to buying or selling an option, investors must read a copy of the Characteristics & Risks of Standardized Options, also known as the options disclosure document (ODD). It explains the characteristics and risks of exchange traded options.
- http://www.optionsclearing.com/about/publications/publication-listing.jsp
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Topics I discussion range from:
Using stocks to Write Covered Calls
The Covered Call Investment strategy
Using Covered Calls to earn money
Explaining the Covered Call strategy
Selling Covered Calls
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CREDIT - How and Why to Use a Covered Call Option Strategy
BY ADAM MILTON
Updated July 29, 2019 > https://www.thebalance.com/determining-intrinsic-value-1031125
A covered call is an options strategy involves trades in both the underlying stock and an options contract. The trader buys (or already owns) the underlying stock. They will then sell call options for the same number (or less) of share held and then wait for the options contract to be exercised or to expire.
Exercising the Options Contract
If the options contract is exercised (at any time for US options, and at expiration for European options) the trader will sell the stock at the strike price, and if the options contract is not exercised the trader will keep the stock.
For a covered call, the call that is sold is typically out of the money (OTM). This allows for profit to be made on both the options contract sale and the stock if the stock price stays below the strike price of the OTM option. If you believe the stock price is going to drop, but you still want to maintain your stock position, for the time being, you can sell an in the money call option (ITM).
For this, you will receive a higher premium from the buyer of your call option, but the stock must fall below the ITM option strike price, otherwise, the buyer of your option will be entitled to receive your shares if the share price is above the option's strike price at expiration (you lose your share position). Covered call writing is typically used by investors and longer-term traders, and is rarely used by day traders.
How to Create a Covered Call Trade
Purchase a stock, and only buy it in lots of 100 shares.
Sell a call contract for every 100 shares of stock you own. One call contract represents 100 shares of stock. If you own 500 shares of stock, you can sell up to 5 call contracts against that position. You can also sell less than 5 contracts, which means if the call options are exercised you won't have to relinquish all of your stock position. In this example, if you sell 3 contracts, and the price is above the strike price at expiration, 300 of your shares will be called away, but you will still have 200 remaining.
LEARN MORE
Wait for the call to be exercised or to expire. You are making money off the premium the buyer of the call option pays to you. If the premium is $0.10 per share, you make that full premium if the buyer holds the option until expiration and it is not exercised. You can buy back the option before expiry, but there is little reason to do so, and this isn't usually part of the strategy.
Risks and Rewards of the Covered Call Options Strategy
The risk of a covered call comes from holding the stock position, which could drop in price. Your maximum loss occurs if the stock goes to zero. Therefore, you would calculate your maximum loss per share as:
Maximum loss per share = (Stock entry price - $0) + Option premium received
For example, if you buy a stock at $9, and receive a $0.10 option premium on your sold call, your maximum loss is $8.90 per share. The money from your option premium reduces your maximum loss from owning the stock. The option premium income comes at a cost though, as it also limits your upside on the stock.
You can only profit on the stock up to the strike price of the options contracts you sold. Therefore, calculate your maximum profit as:
Maximum profit = (Strike price - stock entry price) + Option premium received
For example, if you buy a stock at $9, receive a $0.10 option premium from selling a $9.50 strike price call, then you maintain your stock position as long as the stock price stays below $9.50 at expiration. If the stock price moves to $10, you only profit up to $9.50, so your profit is $9.50 - $9.00 + $0.10 = $0.60.
If you sell an ITM call option, the underlying stock's price will need to fall below the call's strike price in order for you to maintain your shares. If this occurs, you will likely be facing a loss on your stock position, but you will still own your shares, and you will have received the premium to help offset the loss.
Final Word on the Covered Call Options Strategy
The main goal of the covered call is to collect income via option premiums by selling calls against a stock that you already own. Assuming the stock doesn't move above the strike price, you collect the premium and maintain your stock position (which can still profit up to the strike price).
Traders need to factor in commission when trading covered calls. If commissions will erase a significant portion of the premium received, then it isn't worthwhile to sell the option(s) and create a covered call.
Link can be accessed here > https://www.thebalance.com/determining-intrinsic-value-1031125