Perpetual Income Trade Alert: CAH, KHC

The market sell-off following yesterday’s Federal Reserve rate hike is not giving us much room to manage positions, but there are two we can roll today.


Cardinal Health (CAH): 80.12

Cardinal Health turned in an excellent earnings report this morning. Fiscal Q3 earnings of $1.74 a share beat by $0.26. Revenue rose 12.6% year over year to $50.5 billion, beating by $830 million. The company raised its full-fiscal-year EPS guidance to $5.60 to $5.80, up from $5.20. Management also raised its free cash flow guidance for the rest of 2023, which is a good sign for the dividend payment.

Yet, with all that good news, the stock is down along with the rest of the market. Let’s take advantage of the still elevated premiums to roll our put out to the monthly expiration.

ACTION: Roll the CAH 5 May 79 put to the CAH 19 May 79 put for a net credit of around $0.75 to $0.85.

Buy to close CAH 5 May 79 put
Sell to open CAH 19 May 79 put


Kraft Heinz (KHC): 40.82

Kraft Heinz has a similar story to Cardinal Health. Q1 EPS of $0.68 beat by $0.08 and revenue of $6.5 billion beat by $100 million, up 7.3% year over year. Management raised adjusted EPS guidance from $2.73 to the $2.83 to $2.91 range. In short, the turnaround from 18 months ago continues on track.

The stock is trading higher today. Let’s roll our call out two weeks for a solid premium.

ACTION:  Roll the KHC 5 May 41 call to the KHC 19 May 41 call for a net credit of around 0.38 to 0.42.

Buy to close KHC 5 May 41 call
Sell to open KHC 19 May 41 call

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