Seller's Paradise

M&A has been on fire lately, with Q1 2015 being the highest first quarter in 8 years globally. In the US it's even better, being the largest M&A first quarter since the bubble of 2000. (see Fortune's M&A mania: Deal activity hits 8-year high)

All this activity got John Divine at InvestorPlace thinking about who could be the next target company to be bought. He came up with a Top 10 M&A Targets list for today's market. And that got us thinking about writing some covered calls on those M&A targets, since some of them offer decent premiums because of the expectation of a possible take-out. See Investing In Acquisition Targets.

There has been lots of talk about the price of oil bouncing back (see MarketWatch's Take a look at energy stocks, Fortune's interview with Chevron's CEO, and InvestorPlace's 5 Energy Stocks That Are Powering Up) and how now is a good time to get into energy stocks.

Our article Best Energy Stocks we show how to use our screener to look for energy stocks to write covered calls on (some candidates are CHK, HAL, SWN, PSX, NBL, VLO, QEP, LYB, COP and CVX).

A recent article on SeekingAlpha caught our eye. The author discusses 2 kinds of investors he sees: growth stock investors (mostly interested in capital gains) or dividend growth investors (mostly interested in lower risk and a more secure retirement). He makes the case that over time the dividend growth investor has a higher probability of ending up wealthy.

We agree and point out that the only thing better than a nice long history of dividend growth is a nice long history of covered call premiums combined with dividends.

In particular, the author likes T, JNJ, KO, XOM, PG, O, AAPL, GE, and MMM. See the original article for more info on his theory of why dividend growth investors will win in the long run.

Eaton Vance has several closed-end funds that use covered calls. One of them is the Eaton Vance Enhanced Equity Income Fund II (symbol EOS). It has a 7.6% annual yield, paid in monthly increments. It is a broad-based fund, following the Russell 1000, and they write covered calls on 40% of their holdings for extra income.

William Stamm writes on SeekingAlpha that he has studied the components that make up the Eaton Vance fund to come with a list of top 10 overall total performers, which make up 30% of their portfolio. They are: AAPL, GOOG, MSFT, AMGN, FB, V, AMZN, CELG, CMCSA, and UNP.

Those are all excellent choices for covered call writing, whether you choose to cover 40% as EOS does, or 100% for less upside but more income.

Thanks to everyone who participated in our Guess The Dow contest. Our winner was Robert Bright whose guess for the closing value of the DJIA was within 1/10th of 1 percent almost a month in advance. Nice work, Robert! See the entries histogram and list of winners.

With just over 2 weeks to go until the May options expire, the top 4 covered calls Born To Sell members have written are (in order of popularity):

(Note: Born To Sell members have access to the full Top 10 Covered Call list, as well as having this list update real-time as members change positions. These are not recommendations, they are merely a reflection of our members' current positions.)

Currently, the top 8 stocks Born To Sell members are using for their Watchlist are (in order of popularity):

(Note: Born To Sell members have access to the full Top 20 Watchlist, as well as having this list update real-time as members change their watchlists. And, you can have the highest yielding covered calls from your personal watchlist emailed to you after the close each day. Never miss a fat premium from your watchlist again!)

Born To Sell is dedicated to only one thing: Making Money With Covered Calls. Our subscribers have access to state-of-the-art covered call screeners and covered call portfolio management tools. For less than the profit of a single trade you could be enjoying recurring monthly income using our tools. Three subscription types to choose from:

Plus, all subscriptions begin with a no-obligation 2-week free trial. What are you waiting for? Start collecting premium today!

Happy Trading,

The Born To Sell Team