Trade Alert: Catch the Cash

What’s in It for You? 

Minnesota-based utility giant Xcel Energy (NYSE: XEL) has an impressive footprint that spans eight states across the Southwest and the Upper Midwest. The latter geography accounts for its big push into wind generation under its “Steel for Fuel” initiative.

But the $22.4 billion utility holding company isn’t stopping there. Its ambitious capital plan allocates $4.2 billion to develop wind generation and other renewables over the next five years. That would boost renewables to around 25% of Xcel’s overall rate base.

Constructive regulatory relations for its core utility businesses along with growth from renewables puts Xcel on an above-average earnings and dividend-growth trajectory.

Meanwhile, the utility sector’s correction has brought the share price back to a more reasonable level.

This trade will generate immediate income of $50 per contract now, with the possibility of buying this utility at a 9.3% discount to where it currently trades if the stock gets put to you. Investors should set aside $4,000 per contract sold to buy the stock in case the option expires in the money.

Regardless of how many contracts you sell, it’s absolutely critical that you follow the instructions below, particularly when it comes to setting the limit order.

How to Make the Trade:

  • Trade: Sell to open the June 15, 2018, $40 Put on XEL.
  • Allocation: Sell one put for every 100 shares you would be pleased to buy at $40 per share.
  • Prices:
    • Current Stock Price: $44.10
    • Limit Order Price: a credit of $0.50 or more.
    • Tell your broker: “I want to sell a put on Xcel Energy (NYSE: XEL) stock. Specifically, I want to ‘sell to open’ one June $40 Put for a credit of $0.50 per share or more.”
  • Further Instructions Regarding the Trade:
    • If the option price changes, you can adjust our recommended limit based on the midpoint of the bid/ask spread, which you should be able to see when entering the trade. Just make sure the potential credit is at least $0.50 per share or more.
    • Place your limit order on a “good ‘til canceled” (GTC) basis and be patient.

The Win-Win Situation: 

For every put contract you sell, you will collect $50 that’s yours to keep no matter what happens in the future.

If the put expires worthless, meaning the stock price is above $40 per share at expiration, then we’ll do another trade to create another instant payment.

If the stock is trading at or below the strike price upon the contract’s expiration, then you’ll be buying this solid utility at a 9.3% discount to the current market price, while locking in a yield of 3.8%—plus the premium you pocketed when you sold the put.

Then we’ll collect the dividend while creating more instant payments by selling covered calls against the stock.

Stock Talk



Sir, I have this order simmering at a credit of $0.50. In the event the mid point continues to drift lower, and the placement of this order becomes less likely, is there a time one should simply cancel the order?
Give it a week or two?

Ari Charney

Ari Charney

Trades are generally valid for a week. Given recent market volatility, not to mention tomorrow’s Federal Reserve meeting, it should be okay to keep it open for another week before canceling the order.


Jeffrey Y


Hi Ari,
Both CUBE and XEL are unable to fill at the recommended credits at this moment. What is your guideline of setting such price limit? I will wait for a few more days, but how about we lower the price limit, e.g. from 0.5 to 0.45, to get a fill, if the price is likely to continuously move up.


Ari Charney

Ari Charney

Hi Jeffrey,

I saw ten CUBE contracts fill at the limit price near the open on 3/12. But that price hasn’t been available since then.

Still waiting on XEL.

In general, trades are valid for a week.

Let’s see what happens after tomorrow’s Fed meeting, which could weigh on dividend stocks and increase potential put credits.


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