STOCK SHOWDOWN - Writing Covered Calls - ABBV vs BMY

Which stock would I buy for Writing Covered Calls - ABBV vs BMY
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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
AbbVie Inc.
	ABBV	vs		BMY
Bristol-Myers Squibb Company
Seeing the World Thru my Eyes - the Straight Talk
Were in an interesting time where the virus has taken the focus off Big Pharma and its seemly high drug costs ... and in fact if I was a betting man I would even suggest that coming out of this virus situation the heat that has been placed on them will not be as HOT ... reason being Big Pharma for the most part, as best we can tell has stepped up the efforts to find drugs and testing kit solutions for the virus and that has cooled the relationship with politicians for now and I think that will be the trend leading into and thru 2021 ... and if one were to come up with a vaccine during Trump's Presidency ... I'm guessing that will play serious favor and ALL Big Pharma will be let off the hook for criticism ... so I asked myself, let's break this down and compare two companies that have recently completed mergers (for growth) and ask the question - near term - which company is best for Writing Covered Calls and sprinkle in some bigger picture investing observations in this Stock Showdown!
NOTE - AT THE TIME OF THIS POSTING, BOTH COMPANIES STOCK PRICES BELOW
ABBV			BMY
$90.85			$61.29
AbbVie Inc.			Bristol-Myers Squibb Company
Just in case you didn't know ... here's some basic company information about what they do.
AbbVie Inc., a research-based biopharmaceutical company, develops and markets pharmaceutical products in the United States, Japan, Germany, Canada, France, Spain, Italy, the Netherlands, the United Kingdom, Brazil, and internationally. The company offers HUMIRA, a biologic therapy administered as an injection for autoimmune and intestinal diseases; SKYRIZI to treat moderate to severe plaque psoriasis in adults; RINVOQ, a JAK inhibitor for the treatment of moderate to severe active rheumatoid arthritis in adult patients; IMBRUVICA to treat adult patients with chronic lymphocytic leukemia ... The company was incorporated in 2012 and is based in North Chicago, Illinois.			Bristol-Myers Squibb Company discovers, develops, licenses, manufactures, markets, distributes, and sells biopharmaceutical products worldwide. It offers products in the following therapeutic classes: hematology, oncology, cardiovascular, and immunology. The company's products include Opdivo, a biological product for anti-cancer indications; Eliquis, an oral inhibitor targeted at stroke prevention in adult patients ... The company was formerly known as Bristol-Myers Company and changed its name to Bristol-Myers Squibb Company in 1989. Bristol-Myers Squibb Company was founded in 1887 and is headquartered in New York, New York.
Yahoo Summary-ABBV			Yahoo Summary-BMY
#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 .
AbbVie Inc.			Bristol-Myers Squibb Company
S&P 500?	OPTIONS?	DIVIDEND?	S&P 500?	OPTIONS?	DIVIDEND?
Confirm	Option Chain-ABBV	Verify-ABBV	Confirm	Option Chain-BMY	Verify-BMY
Seeing the World Thru my Eyes - the Straight Talk
Because both offer pretty much the same risk ... I have to ask myself which company has a better growth story ... and for my money I think BMY with its merger with Celgene has more growth in its future so I'd lean BMY here but do understand that both these companies have a strong growth story in my opinion ... both are S&P 500 type companies, have dividends and have good option volume/action. I like both (remember, we buy a stock thinking we might have to hold it if the trade goes bad ... so I wouldn't mind holding either.
#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-ABBV			See Support-BMY
Seeing the World Thru my Eyes - the Straight Talk
Wow! The charts are so similar ... both have recovered from the March 2020 virus selloff ... now they seem to have settled down ... I suspect outside of news and events ... they trade with the overall markets.
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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.
AbbVie Inc.			Bristol-Myers Squibb Company
Zacks	Yahoo Prem	AmBull	Zacks	Yahoo Prem	AmBull
BUY	FAIRVALUED	STAY IN CASH	BUY	FAIR VALUED	STAY LONG
Corfirm Rating - ABBV	Yahoo Summary-ABBV	Trending? -ABBV	Corfirm Rating - BMY	Yahoo Summary-BMY	Trending? -BMY
Seeing the World Thru my Eyes - the Straight Talk
This doesn't surprise me ... both are considered FAIRVALUED on Yahoo Prem ... even Zacks agrees and has both at BUY ... ABBV is a stronger Zacks BUY but I feel a BUY rec is a BUY rec anyway you slice it. Both stocks are sitting good right now ... now the candlestick charts from American Bull has BMY staying long in the current stock purchase where they have ABBV as a stay in cash ... if both stocks trend higher Im sure they will both be in a long position.
#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-ABBV			Yahoo Summary-BMY
Seeing the World Thru my Eyes - the Straight Talk
So SO close here ... ABBV is the larger company and the revenues and earnings play that out ... both have similar up trending numbers ... ABBV acquisition of Allergan might have a positive effect on the overall earnings picture ... BMY is just trending steady eddie and I think the Celgene merger will help add growth. They look similar but I have my favorite on this one.
#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
ABBV	Current Price	Strike Price	LAST TRADE	30 day return	Expiration
	$90.85	$92.50	$2.34	4.39%	5/15/2020
	$90.85	$95.00	$1.39	6.10%	5/15/2020
	$90.85	$97.50	$0.79	8.19%	5/15/2020
			THIS IS NOT THE BID OR MID
Check this stocks options here >		https://finance.yahoo.com/quote/ABBV/options?p=ABBV
	THESE ARE NOT REAL TIME! CLICK LINK BELOW FOR THAT
BMY	Current Price	Strike Price	LAST TRADE	30 day return	Expiration
	$61.29	$62.50	$1.54	4.49%	5/15/2020
	$61.29	$65.00	$0.61	7.05%	5/15/2020
	$61.29	$67.50	$0.20	10.46%	5/15/2020
			THIS IS NOT THE BID OR MID
Check this stocks options here >		https://finance.yahoo.com/quote/BMY/options?p=BMY
Seeing the World Thru my Eyes - the Straight Talk
Both have good options and in fact I have played both for 30 day covered calls as well as CCW+DIV Capture covered calls because they both pay good quarterly dividends. ABBV's dividend is larger ... both are div's that I could write home about.
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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-ABBV		Verify-ABBV	Alpha Articles Search-BMY		Verify-BMY
MY WINNER IS!!!
	ABBV	vs		BMY
	SCORE		SCORE
	5		6
Seeing the World Thru my Eyes - the Straight Talk Recap!
Bristol Myers is my winner for this Stock Showndown - mainly because I like the BMY growth story more then ABBV's ... but that doesn't mean ABBV is chop liver ... they have a strong balance sheet, products and seemly future with its merger with Allergan ... BMY's story is more compelling and in fact is my #1 Buy and Hold stock (recent blog post) and hasn't disappointed since making that proclaimion ... if you believe the future is bright for both companies, they are both buy and hold canidates and can be used for nice 3% covered calls for income.
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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
~	Jul 24, 2020 - Jul 28, 2020		~	Jul 23, 2020 - Jul 27, 2020
Verify-ABBV			Verify-BMY
Dividend 2%	EX-DATE	Ave Vol	Dividend 2%	EX-DATE	Ave Vol
4.83%	Apr 14, 2020	13.561M	2.81%	Apr 02, 2020	17.42M
Verify-ABBV			Verify-BMY
What story is the chart telling you?
StockCharts	Finviz	BarCharts	StockCharts	Finviz	BarCharts
View Chart-ABBV	See Support-ABBV	View Chart-ABBV	View Chart-BMY	See Support-BMY	View Chart-BMY
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 - Yes - at the time of this posting I do have a position in this equity. By posting this I am by no means recommending this equity and am not front running for its performance. I have risked my own money and am accountable for the trade results.
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