[Options] A Steady Dividend Payer on the Verge of All-Time Highs

Sean McLaughlin
December 21, 2022

We've covered before how much I like buying stocks that are making new all-time highs. I like them, even more, when I can buy call options because premiums are low. And it's a cherry on top when the stock pays a meaty and steady dividend which lends price action support over the long run!

Today's trade checks all these boxes.

Here's a chart of Gaming & Leisure $GLPI:

Long at that long base that we're just starting to break out of!

Here's what Steve Strazza had to say about it in a recent Young Aristocrats report:

Gaming and Leisure Properties pays a hefty 5.36% yield and has increased its payout for eight consecutive years. Its long-term dividend growth rates are in the double digits.

More importantly, GLPI recently resolved higher from an 18-month range and is now trading back above its pre-pandemic highs.

With a well-defined risk level to trade against and a risk-reward skewed heavily in our favor, we’re buyers of this breakout.

If we’re above 51, we’re long GLPI with a target of 74 over the next 3-6 months.

While the options do not have a huge amount of average volume or open interest. The bid/ask spreads are tight enough for us to keep it simple with a long calls buy.

Here's the Play:

I like buying $GLPI July 60 calls for approximately $1.25 per contract. This premium we pay upfront is the most we can lose and therefore we'll size our position according to the very real possibility we lose 100% of the premium on this trade.

If $GLPI makes a run at that $74 price target over the next 6 months, these calls would be positioned to see a 10X+ return. Gotta love that! Be that as it may, I'll still look to close half of my position when I can sell half of the calls for double today's entry price. Selling half at around $2.50 would pay me back my original risk capital and give me a #FreeRide on the rest. That is a position of strength!

In the meantime, if we see $GLPI close below $50.50 at any time during our hold, I'll look to exit the position and book the loss, if there's any premium left to sell.

If you have any questions on this trade, please send them here.

ASO subscribers who missed last week’s live video Jam Session where we reviewed activity in our options portfolio from the past week can catch it here.

~ @chicagosean

P.S. We do trades like this regularly. If you'd like to leverage Best-in-Class technical analysis into smarter directional options trades, try out All Star Options Risk Free! Or give us a call to learn more: 323-421-7991.

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