Kick Back and Crack Open Another KO Trade Dear Savio, After the week we've had on Wall Street, we're sure everyone is glad to see it's Friday. It'll be nice to take a breather from the volatility that came roaring back in the stock market this week. However, even though it has been a volatile trading week, there are still some great bullish trading opportunities out there. In fact, we see one on Coca-Cola Company (KO). Interestingly, one of the most attractive aspects of this trade is the fact that KO has had a lackluster recovery since the market tanked in February and March. You see, a lot of the stocks that have been selling off this week are those that have enjoyed a strong rebound this year. That means there's a lot of profits to take off the table. KO, on the other hand, has barely recovered two-thirds of the ground it lost earlier this year. So, while it did pull back with the rest of the market on Wednesday, it didn't have as much to give up. 
This has left KO well within the gradually up-trending channel the stock has been in since April, and we anticipate it is going to remain in this channel for the foreseeable future. The company just reported earnings last week and beat revenue estimates by $330 million and Non-GAAP earnings estimates by $0.09 per share -- coming in at $8.7 billion and $0.55 per share, respectively. Those weren't the most exciting numbers though. KO also reported the company had boosted its operating margins to 30.4% last quarter, compared to 28.1% a year ago. This improvement has given traders hope that even if away-from-home sales remain depressed due to the pandemic, KO is squeezing more profits out of the money it is bringing in.
To take advantage of this good news, we recommend you… 'Sell to open' the KO November 20th $45 Put Write (KO201120P00045000) for a minimum price of $0.53. Even though we see KO forming support at around $47, we chose the $45 strike price to give us plenty of latitude in case the bearish market volatility continues to accelerate during the coming weeks. The options are paying such a high volatility premium that we are still making a fantastic annualized return on this trade, even with the extra cushion between the current stock price and our strike price. Here's How the Trade Can Work Out…
Instant income: With this put sell, we plan to collect an instant income payment of at least $53 per contract.
Put expires out of the money: If KO's stock price remains above our $45 strike price at expiration on Nov. 20, the puts will expire worthless, allowing us to keep the $53 per contract we receive for selling this option. That's a return of 7.41% in just 21 days, or an annualized return of 246.32%.
Put expires in the money: If KO's stock price is below our strike price at expiration, you will be "put" 100 shares of KO at a cost basis of $44.47 ($45 strike price – $0.53 option premium). That's a discount of 7.30% below the current market price.
Taking possession of the shares will then allow us to write covered calls against the stock for additional income.
If you do not want to take possession of the stock, you will need to "buy back to close" the put before expiration on Nov. 20.
We'll keep you posted as the trade progresses. | Coca-Cola Company (KO) common stock was trading for approximately $47.97 per share at the time of this alert. Long-Term Focused Strategic Positions: Right now, we only recommend selling the following covered calls or puts if you are already holding a long or short position in the underlying stock. We are not recommending our stock positions for new entries at this time. If you haven't already entered the following and can still get in for a price at, or better than, our recommended minimum/maximum, we still recommend entering: - Put Write: (Short) GLD November 20th $178 Put Write (GLD201120P00178000) for a minimum of $3.35.
- Put Write: (Short) NKE November 20th $120 Put Write (NKE201127P00120000) for a minimum of $3.50.
- Put Write: (Short) SBUX November 20th $85 Put Write (SBUX201120P00085000) for a minimum of $2.00.
- Put Write: (Short) TGT November 20th $155 Put Write (TGT201120P00155000) for a minimum of $5.00.
- Put Write: (Short) UPS November 20th $165 Put Write (UPS201120P00165000) for a minimum of $5.50.
- Short Stock: Wynn Resorts (WYNN) common stock for a minimum of $55.00.
We are still holding the following strategic trades, but either the current value of the short option or the price action of the stock itself doesn’t warrant entering a new trade at this time. If you haven’t already entered these trades, we recommend waiting until further notice before opening a new position: - Long Stock: Bank of America (BAC) common stock for a maximum of $25.00.
- Long Stock: Apple (AAPL) common stock for a maximum of $125.00.
- Long Stock: Cisco Systems (CSCO) common stock for a maximum of $56.00.
- Long Stock: Microsoft (MSFT) common stock for a maximum of $215.00.
- Short Stock: iShares Investment Grade Corporate Bond ETF (LQD) common stock for a minimum of $128.00.
If put-writes and buy-writes are new strategies for you, be sure to check out our Resources page for more information. For more on these trades, be sure to attend our next weekly webinar Wednesday at 8 p.m. ET. Sincerely, 
John Jagerson and Wade Hansen
Editors, Strategic Trader
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