Please Note: These recommended trades only apply to those Personal Finance Income Plus members who already have positions in the mentioned stocks and covered calls. Do NOT do these trades as initial positions.

1. Diagonal Spread Roll of Union Pacific (NYSE: UNP) to February

and

“Sell to Open” February $120 Call

Option Symbols: UNP121117C125 and UNP130216C120

Limit Order Price: Net credit of $4.13 or more ($413 per spread)

If your broker doesn’t allow option spreads, then you’ll have to do two separate single-option trades:

(a) “Buy to close” November $125 call for a debit of $0.02 or less ($2 per contract)


(b) “Sell to open” February $120 call for a credit of $4.15 or more ($415 per contract)

Directional View for Underlying Stock: Neutral to bullish

Personal Finance Portfolio: Growth

•    Tell your broker:

For a diagonal spread (preferred):

I’d like to enter an option spread order on Union Pacific (UNP) stock. Specifically, I want to buy to close the November $125 call and sell to open the February $120 call for a net credit of $4.13 per share or more.

• For a two-part trade:

I’d like to buy to close the November $125 call on Union Pacific (UNP) stock for a debit of $0.02 per share or less.

I’d like to sell to open the February $120 call on Union Pacific (UNP) stock for a credit of $4.15 per share or more.

Please note: The important thing is to achieve a net credit on the roll (i.e., both trades) of $4.13 or more. The specific limit prices of the individual “buy to close” and “sell to open” trades are just starting points and should be adjusted as needed, keeping the net credit of the overall roll in mind.

2. Diagonal Spread Roll of CF Industries (NYSE: CF) to February

and

“Sell to Open” February $205 Call

Option Symbols: CF121117C230 and CF130216C205

Limit Order Price: Net credit of $8.87 or more ($887 per spread)

If your broker doesn’t allow option spreads, then you’ll have to do two separate single-option trades:

(a) “Buy to close” November $230 call for a debit of $0.03 or less ($3 per contract)


(b) “Sell to open” February $205 call for a credit of $8.90 or more ($890 per contract)

Directional View for Underlying Stock: Neutral to bullish

Personal Finance Portfolio: Growth

•    Tell your broker:

For a diagonal spread (preferred):

I’d like to enter an option spread order on CF Industries (CF) stock. Specifically, I want to buy to close the November $230 call and sell to open the February $205 call for a net credit of $8.87 per share or more.

• For a two-part trade:

I’d like to buy to close the November $230 call on CF Industries (CF) stock for a debit of $0.03 per share or less.

I’d like to sell to open the February $205 call on CF Industries (CF) stock for a credit of $8.90 per share or more.

Please note: The important thing is to achieve a net credit on the roll (i.e., both trades) of $8.87 or more. The specific limit prices of the individual “buy to close” and “sell to open” trades are just starting points and should be adjusted as needed, keeping the net credit of the overall roll in mind.

3. Diagonal Spread Roll of Southern Co. (NYSE: SO) to February

and

“Sell to Open” February $44 Call

Option Symbols: SO121117C47 and SO130216C44

Limit Order Price: Net credit of $0.66 or more ($66 per spread)

If your broker doesn’t allow option spreads, then you’ll have to do two separate single-option trades:

(a) “Buy to close” November $47 call for a debit of $0.01  ($1 per contract)


(b) “Sell to open” February $44 call for a credit of $0.67 or more ($67 per contract)

Directional View for Underlying Stock: Neutral to bullish

Personal Finance Portfolio: Income

•    Tell your broker:

For a diagonal spread (preferred):

I’d like to enter an option spread order on Southern Co. (SO) stock. Specifically, I want to buy to close the November $47 call and sell to open the February $44 call for a net credit of $0.66 per share or more.

• For a two-part trade:

I’d like to buy to close the November $47 call on Southern Co. (SO) stock for a debit of $0.01 per share.

I’d like to sell to open the February $44 call on Southern Co. (SO) stock for a credit of $0.67 per share or more.

Please note: The important thing is to achieve a net credit on the roll (i.e., both trades) of $0.66 or more. The specific limit prices of the individual “buy to close” and “sell to open” trades are just starting points and should be adjusted as needed, keeping the net credit of the overall roll in mind.

4. Horizontal Spread Roll of Freeport-McMoRan Copper & Gold (NYSE: FCX) to February

and

“Sell to Open” February $37 Call

Option Symbols: FCX121117C37 and FCX130216C37

Limit Order Price: Net credit of $2.13 or more ($213 per spread)

If your broker doesn’t allow option spreads, then you’ll have to do two separate single-option trades:

(a) “Buy to close” November $37 call for a debit of $0.70 or less ($70 per contract)


(b) “Sell to open” February $37 call for a credit of $2.83 or more ($283 per contract)

Directional View for Underlying Stock: Neutral to bullish

Personal Finance Portfolio: Growth

•    Tell your broker:

For a diagonal spread (preferred):

I’d like to enter an option spread order on Freeport-McMoRan Copper & Gold (FCX) stock. Specifically, I want to buy to close the November $37 call and sell to open the February $37 call for a net credit of $2.13 per share or more.

• For a two-part trade:

I’d like to buy to close the November $37 call on Freeport-McMoRan Copper & Gold (FCX) stock for a debit of $0.70 per share or less.

I’d like to sell to open the February $37 call on Freeport-McMoRan Copper & Gold (FCX) stock for a credit of $2.83 per share or more.

Please note: The important thing is to achieve a net credit on the roll (i.e., both trades) of $2.13 or more. The specific limit prices of the individual “buy to close” and “sell to open” trades are just starting points and should be adjusted as needed, keeping the net credit of the overall roll in mind.

Price Adjustment Regarding These Roll Trades

Unlike the opening of an initial trade, the Freeport-McMoRan horizontal spread trade involves closing an in-the-money call option before it gets automatically exercised against us. Consequently, we do not have the luxury of patience and possibly passing on the trade (unless you are willing to sell your FCX stock). We will need to be flexible with our limit prices and adjust them if necessary as we get nearer to the market’s close on Friday, Nov. 16.

The limit credit price I suggest above for FCX is a starting point. If it doesn’t fill within a few hours, I recommend adjusting the limit credit price down by a few cents per share and waiting a few hours. If this adjusted limit price doesn’t fill, adjust again by a few more cents. Repeat the process until you get filled.

For the other three diagonal spread trades (UNP, CF, SO), there is less risk of having the underlying stock called away because the stock prices are currently below the call strike prices. As such, you can be more stubborn about your limit prices for the roll credits. If the limit credit prices don’t fill, you can wait until next week to sell February covered calls.