Our HX Income strategy is built to help you generate income.
We identify high-quality companies and wait for them to stumble. Once they become too oversold, we dive in to ensure they are still great companies and stocks.
If our research comes back positive, we show you how to make income off the situation!
You can read about our strategy in the HX Income primer here.
With options expiration today, we are going to see income booked on a couple of recent recommendations.
Here are the updates…
Our first recommendation in December was selling puts in biotechnology leader Amgen Inc. (NASDAQ: AMGN).
The company is the original biotechnology success story, and the stock has returned an astounding 59,000% since it came public in 1983.
The company also has had a great track in recent years with earnings growth, beating numbers and rising estimates.
After hitting a new all-time high back in September, though, the stock has sold off hard in recent months.
First, there are concerns about the impact of the new Trump administration on the drug industry.
Second, after they reported initial results from their new GLP-1 drug, they slightly disappointed investors.
We are not concerned about the first issue; the second one is something we have seen many times with drug companies. It is almost worth buying these situations.
Here is the stock price chart and where we recommended selling puts for income. We also have set the chart of our key technical indicator – the relative strength index or "RSI" – at the bottom of the chart.
On the chart, you can see that the shares have rallied from those levels. Remember that with our income strategy, we don't need them to rally a lot for us to collect our income.
We recommended selling the January 17, 2025, $265 puts in early December. As we said, the stock has rallied, and this puts us in a good position with these puts.
ACTION TO TAKE: With the stock trading above $265 per share today, those put options will expire worthless today, and you can keep the income!
Later in the month, we also recommended shares of the largest advertising agency in the world – Omnicom Group Inc. (NYSE: OMC).
They have leveraged their scale into an admirable history of earnings growth and outperforming expectations. This has led to it being a winning stock over the years.
They recently announced an acquisition of one of their major competitors – The Interpublic Group of Companies, Inc. (NYSE: IPG).
Although the transaction makes a lot of sense, the potential for many new shares hit OMC stock hard.
Below is the stock price chart along with the RSI over the recent period…
On the chart, we have highlighted in green where we said to sell the puts to generate income.
We recommended selling the January 17, 2025, $85 puts, and the stock is trading right around those levels.
At this point, it looks like the stock will end the day above the $85 level. If that is the case, do nothing and collect your income.
If the stock ends up below that level, we recommend you take the delivery of the stock and own a great company at a great price!
ACTION TO TAKE:
If the stock closes above $85, the put options will expire worthless and keep your income.
If the stock closes below $85, take delivery of the shares and own this great company at an attractive price.
