Generate income while waiting for the comeback with an options trade on an affordable energy stock

Are you looking for an opportunity to invest in a major energy stock trading at a discount with potential upside? Look no further than Chevron (CVX), a company that recently announced the acquisition of Hess Corp for $60 billion. This deal is expected to be completed by the end of June, and some analysts believe it will benefit Chevron by reducing its dependency on the Permian Basin for expansion.

While integrated oil companies like Chevron may not be considered growth stocks, they offer a different kind of value to investors. With a price-to-earnings ratio of just 12.8, Chevron is trading at a discount compared to the S&P 500, making it an attractive option for those looking to generate income through dividend yields.

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One strategy to consider is selling covered calls against Chevron stock. By purchasing CVX at $156 and selling the May $160 covered call for $3.10, investors can collect premium while still allowing for modest upside potential. This allows investors to hold onto their shares and continue to write calls against the stock as previous options expire.

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