With good news reported from the U.S. Bureau of Labor Statistics showing a decline to 13.3%, equity investors are foaming at the mouth to own stocks.

Cloud is an unstoppable trend.

Cloud-computing stocks have been on fire with investors flocking to their rapid growth and exciting news about data processing and storage needs. The biggest players Microsoft (MSFT), Amazon (AMZN), and Alphabet (GOOGL) are joined by smaller companies such as MongoDB (MDB), Atlassian (TEAM), and Twilio (TWLO). Each company has been growing sales faster than 35% in the last year.

First Trust Cloud Computing Fund (SKYY) is an ETF fund that holds exposure to 64 different companies in the cloud computing space. These names have been very volatile over the last year but are now at new all time highs again.

Use the Volatility to your Advantage and Sell Puts

Sell, to open, the July 17, $67 puts on SKYY for $1.4 using a limit order and earn 2.08% payment on your purchase obligation.

At expiration if shares are above $67: put sellers will keep the $1.40 for an 18% annualized return.

At expiration if shares are below $67: put sellers will buy shares at a 7% discount ($67 strike price minus premium payment / yesterday's closing price). For every put sold you will own 100 shares of stock. At this time you will have to decide whether it is best to hold the shares to long term capital gains or if trying to collect more income is more important by selling covered calls.

For protection use a 25% stop on your adjusted cost basis which comes to $49.2.

Disclosure: I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article. The information provided should NOT be considered advice. The topics discussed are risky and have the potential to lose a substantial amount. I am not an investment professional and therefore do not offer individual financial advice. Please do your own research before investing.

Posted Using LeoFinance