Hello and welcome back. I trust God is working all things for your good as you read this today. However, if you do find yourself in a season of turmoil or endless change I hope you’ll remain faithful and still. Knowing that even this to will pass and Jesus will meet you there.
Alright, just like that it’s time to turn our attention to our list of best covered call stocks under $20 for July 2024. Before you proceed further you may like to take a peek at my list of stocks under $20 with weekly options for 2024. That would give you some additional stocks to consider.
Also, if you’re struggling to track your trades or you’re just sick of the monthly fees you may be interested in my free covered call tracker or my free wheel strategy tracker. For those interested in a more comprehensive option, check out my OptionBoxer Portfolio Journal.
Lastly, I’ve got to say it! These stocks may be under $20 for a reason. This list should not be viewed as a recommendation to trade or invest.
Ok, let’s get to this list of the best covered call stocks under $20 for July 2024.
Selection Criteria
- Last Price is under $20
- Open Interest is >5,000 contracts
- Underlying Average Volume is >1 million
- Positive Free Cash Flow
- Positive Net Profit Margins
- Minimum 1% monthly premium at-the-money (at time of writing)
- Positive Recommendation
Best Covered Call Stocks Under $20 for July 2024
1. KMI – Kinder Morgan Inc.
Today’s Current Price – $19.71
Quickly becoming a staple of my best of lists is Kinder Morgan. They operate in the energy sector and have generally been a delight to options traders. The stock has been inside a range since rebounding from the covid crash making it above average from a predictability standpoint.
Couple that with a 1.1% at the money monthly return and you have an asset that could provide a meaningful source of income to a portfolio. However, the downside is that if capital appreciation is a deal breaker then you’ll want to look elsewhere because premium is virtually no existent further out of the money.
2. CNK – Cinemark Holdings
Today’s Current Price – $19.48
Boasting nearly 3% at the money easily checks Cinemark Holdings into our list. Although, holding this company long term does make me somewhat nervous. The movie industry has been shaky since covid and while Cinemark’s chart would suggest the worst is over, I’m just not sure. That said, they definitely fit the bill for a covered call campaign.
Fundamentally, revenues appear to be increasing which is a welcome sign and if Hollywood would get off the woke wagon, I’m sure people would love to continue family night at the movies.
3. BLMN – Bloomin Brands Inc.
Today’s Current Price – $19.21
Checking in at number 3 on our list is a former fan favorite restaurant chain. While I do still enjoy the occasional trip to Outback Steakhouse I can confirm they’re customer volume has declined. At least in my end of the world. That said, Bloomin Brands currently offers 1.8% of premium at the money. Compound that over a year and you’ll enjoy an outsized 20% gain.
Of course, that assumes the current share price decline can find some footing. In March of this year Bloomin Brands traded slightly above $30 per share. Should there earnings improve during the next announcement I think they’ll be fine going forward.
4. RF – Regions Financial Corporation
Today’s Current Price – $18.93
Timing would likely be important with Regions Financial. From the fundamentals it looks like several metrics are trending in the wrong direction but that could just be my bias opinion. They’ve missed on their last 5 earnings but the share price has remained mostly intact having battled back twice from large declines.
Additionally, Regions Financial offers would be call writers 2.9% at the money and a generous 1% just out of the money. Moving just out of the money reduces the income initially but provides a 5% capital appreciation opportunity on the July 19 2024 expiration cycle.
5. M – Macy’s Inc.
Today’s Current Price – $18.30
Personally, I don’t expect Macy’s to be a great long term hold with most “mall” based department stores having already experienced significant decline. That said, they must be doing something to stay in business and for a covered call trader that’s more than enough.
Macy’s has higher than average volatility and currently has an ATR around .60 cents. Meaning, this stock will routinely make 3% or more price swings. If you can stomach the moves, then Macy’s would check most covered call boxes.
6. MAT – Mattel Inc.
Today’s Current Price – $17.82
A stock I’ve traded many times, Mattel comes in just under $18 per share an offers 1.9% at the money to covered call participants. Unfortunately, on a monthly basis we’ll be stuck selling right at the money but if time isn’t a limiting factor moving to the next expiration series would offer 6% of capital appreciation and a premium of 2.5% just out of the money.
Fundamentally, they are improving in several areas but their earnings announcement was poor in April and the share price has traded lower by approximately 15% since that time. In all, Mattel offers an attractive premium with a reasonable upside argument.
7. Alamos Gold Inc.
Today’s Current Price – $15.72
Not a stock I’m familiar with but one that does receive positive ratings from MarketEdge.com, Refinitiv, and Schwab Equity Ratings. Alamos, also had a great year fundamentally in 2023 but that is likely due to gold moving much higher in price. If we look at gold futures, then 2024 should also fair well.
At 2.5% at the money premium there are thousands of worse plays a covered call trader could take and volatility is currently low for this precious metal provider.
8. ABR – Arbor Realty Trust
Today’s Current Price – $14.12
Admittedly, not the greatest options trade on this list. However, couple the 1% at the money options premium with the dividend yield on Arbor Realty and the recipe looks great. Worth mentioning, an at the money call at 12 days to expiration currently has the same premium offering as the monthly expiration.
Arbor Realty Trust is most commonly known for it’s above average dividend yield. The benefit there is demand for shares shouldn’t wane, so long as the dividend remains. 12% in premium annually with a 12% dividend does sound pretty good to me.
9. SIRI – Sirius XM Holdings
Today’s Current Price – $2.93
If you’re new to covered calls and just want to practice without taking much risk then SIRI may fit. Currently trading below $3 per share means risking very little to enter the covered call arena. You won’t lose your shirt with SIRI, in my opinion.
Currently, SIRI offers an eye watering 9% per month at the money. Annualized that’s 108%!!
10. TME – Tencent Music Entertainment Group
Today’s Current Price – $14.01
Saving my most optimistic play for last as a bonus to those that read through the entire list. Tencent Music is a Chinese based company so does carry an added degree of risk. However, as of this writing they offer 3.9% on the monthly at the money contract or 47% annually. Keep a close eye on deteriorating metrics but if this one continues to perform it could be a consideration for that next covered call campaign.
Closing Thoughts
With 2024 halfway over and a presidential election incoming who knows what lay ahead. Thus far, 2024 has been one all time high after another. If you’re concerned we may experience a slow down in growth ahead, covered call writing is a great way to earn additional income from a portfolio.
For those looking to initiate a new covered call position, do so cautiously with the best covered call stocks under $20 for July 2024 as they may be under $20 for a reason. That said, the premiums here are more than attractive and with prudent management could be a great fit for any covered call trader.
God bless,
Jeff
