We constantly build our watchlist of stocks we want to own and trade options against those underlying. We also evaluate those stocks to determine whether or not we will accumulate them and trade options against them.
 

What is the process of selecting our stocks?

 
I select our stocks primarily from the Dividend aristocrats list. But I also watch investing videos on Youtube, follow other investors on social media, and follow other dividend investors’ blogs. These resources give me tips on stocks that I might be interested in.

Then I investigate those stocks. I read about the companies, what they do, how they make money, do they pay dividends, they are making money, what their business is about, etc. I also read about those companies on social media and websites like Seeking Alpha and read other investors’ comments. If I like what I see, I check whether the company offers good options and premiums.

If all is good, I put the stock on my watchlist. If they are still good, I may initiate options trading against these stocks and start selling strangles.

Then I evaluate these stocks based on their valuations. That helps me to determine whether I want also to accumulate these companies.
 

Valuations and trading

 
If I see the company as overvalued, I may be trading options against those companies only. I do not accumulate them. If I get assigned, which I try to avoid as much as possible, I sell covered calls to get rid of those companies. This is also my main reason for accumulating dividend stocks. If I get assigned and hold the position, I want to get paid for holding it while waiting for call assignments.

If I see the companies as undervalued or at fair value, I start selling strangles and buying shares of those companies. I do not try to avoid an assignment at all costs. I still roll and try not to get assigned, but if it happens, I keep the position.
 

Our watchlist

 
Here is our watchlist. Note this is a list of stock we either own or may want to own in the future. This is not a buy list. We evaluate stocks in this list and assign our valuation judgment to each stock based on their intrinsic value. We start accumulating stock positions that are marked as “undervalued.” We also start trading options against those stocks.

Some stocks will be overvalued all the time. Like Apple or SNOW or other tech stocks. But not just tech stocks. Coca-Cola (KO) has been overvalued for years. The only way to get these stocks at better value is to trade options against them and artificially lower the cost basis for purchasing the stock. It is a long process, though.
 

We will be updating the watchlist regularly.
 

Stocks to buy

 
Out of the watchlist above, we compile a list of stocks we want to accumulate. Every month, we create a list of stocks to buy, and we continue accumulating these stocks. It is like a goal. We set the goal, and then we start buying, diligently, slowly, one stock after another. Until we buy 100 shares. Then we go and move to another stock on the list.

Here is a list of stocks to buy in 2023:

Current stock positions

 
Out of both lists above, we accumulate our stocks. Below is the most current list of our holdings. We also publish this list in our weekly investing and trading reports.

 

Holdings as of 10/09/2021
 

I hope this helps you to understand our selection and accumulation process. Let us know if you have questions.