The shares of Texas Instruments Incorporated (NASDAQ:TXN) have had a hard time staging a rebound since a bear note from Raymond James early last week put the equity at an annual low of $161.04. Yesterday's broad-market dip put TXN back within a few cents of this low at one point during the session, though the stock pulled in a win by end of day. Texas Instruments stock was last seen up 0.5% at $170.48 as it tests a recent ceiling at the $170 level, though it's still down 9.7% this year. 

Despite this tepid price action, short sellers have been hitting the exits in droves. Short interest fell 21.9% in the last reporting period and now makes up a slim 1.6% of the stock's available float, or a little under three days' worth of pent-up buying power at TXN's average pace of trading. 

Analysts have yet to come around on the stock. Of the 17 analysts in coverage, just five say "strong buy," compared to 12 "hold" or worse ratings. 

Moreover, Texas Instruments looks to be an incredibly safe option for dividend investors. TXN provides a strong dividend yield of 2.78% with forward dividend of $4.60, as well as decently well-rounded fundamentals.

TXN currently holds a manageable balance sheet with $9.74 billion in cash and $8.21 billion in total debt. Texas Instruments has grown its annual revenues and net income 27% and 38%, respectively, since fiscal 2020. TXN is also expected to increase revenues by 3.9% and earnings by 3.1% for fiscal 2022, too. In addition, Texas Instruments stock has a forward price-earnings ratio 18.15, which is an intriguing valuation for a semiconductor company valued at $153.99 billion. However, TXN also trades at a price-sales ratio of 8.51, making its valuation less attractive but still offering a great long-term opportunity.

The shares of Etsy Inc (NASDAQ:ETSY) are up 7.1% at $137.70 at last glance, earlier trading as high as $149.00. The crafty e-commerce platform reported fourth-quarter earnings of $1.11 per share on revenue of $717.14, which is much higher than the 79 cents per share and $685.45 anticipated by analysts. ETSY is brushing off no fewer than four price-target cuts as well, which came after the company's first-quarter guidance came in below expectations. 

ETSY has been falling on the charts since its late-November record peak of $307.75, with pressure at the 20-day moving average helping to guide the shares lower. Yesterday, the stock bottomed out at $109.38 -- its lowest level since September 2020. Year-to-date, the equity is down over 37%. 

Options traders are targeting Etsy stock at nine times the intraday average today, with 18,000 calls and 18,000 puts across the tape so far. The weekly 2/25 119-strike call is the most popular by far, followed by the 140- and 150-strike calls in the same weekly series, with all three expiring today. 

The options pits were bearish ahead of the earnings event, as per ETSY's 10-day put/call volume ratio of 1.86 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX). This ratio stands higher than 99% of readings from the past year, indicating puts being picked up at a much faster-than-usual rate. 

Now could be a good time to get in on these options. The security's Schaeffer's Volatility Scorecard (SVS) sits at a high 95 out of 100, meaning Etsy stock has exceeded option traders' volatility expectations during the past year.

Meanwhile, short interest makes up 7% of the stock's available float, leaving plenty of short covering potential. In other words, it would take over three days to buy back these bearish bets, at the security's average pace of trading. 

Foot Locker, Inc (NYSE:FL) stock is plummeting today, last seen down 26% to trade at $30.64, after the athletic apparel and shoe retailer's trip to the earnings confessional. While the company reported fourth-quarter earnings and revenue that topped analysts' expectations, its full-year profit and comparable-store sales outlook were weaker than expected, with Foot Locker citing changes in its vendor mix and a decline in fiscal stimulus.

On the charts, FL has struggled for the last nine months, losing 53.2% in that time frame. The security tested a floor at $40 multiple times lately, but is now set for its lowest close since July 2020. Longer term, Foot Locker stock is off 44.1% year-over-year.

Options activity is running rampant in response to the equity's plunge. So far, 6,124 puts and 4,243 calls have crossed the tape, which is a 27 times the amount typically seen at this point. Most popular by far is the weekly 2/25 30-strike call, followed by the weekly 3/4 25-strike put, with new positions being opened at both contracts. 

Today investors can expect data on personal income, consumer spending, and the University of Michigan consumer sentiment report. There will also be more inflation data to dig through, including PCE updates, as well as monthly core inflation for January, and 5-year inflation expectations. 

The following public companies are slated to release corporate earnings today, February 25:

ACM Research Inc. (NASDAQ:ACMR -- $80.23) develops, manufactures, and sells single-wafer wet cleaning equipment for enhancing the manufacturing process and yield for integrated chips worldwide. ACM Research will report its Q4 earnings of 2021 before the open today.

Biohaven Pharmaceutical Holding Co. Ltd. (NYSE:BHVN -- $133.81) develops products candidates targeting neurological diseases and rare disorders in the United States. Biohaven Pharmaceutical will report its Q4 earnings of 2021 before the open today.

bluebird bio Inc. (NASDAQ:BLUE -- $6.17) researches, develops, and commercializes transformative gene therapies for severe genetic diseases and cancer. bluebird bio will report its Q4 earnings of 2021 before the open today.

Carter's Inc. (NYSE:CRI -- $87.82) designs, sources, and markets branded childrenswear under the Carter's, OshKosh, Skip Hop, Child of Mine, Just One You, Simple Joys, Carter's little baby basics, and other brands in the United States and internationally. Carter's will report its Q4 earnings of 2021 before the open today.

Canadian Imperial Bank of Commerce (NYSE:CM -- $120.84) provides various financial products and services to personal, business, public sector, and institutional clients in Canada, the United States, and internationally. Canadian Imperial Bank of Commerce will report its Q4 earnings of 2021 before the open today.

Cinemark Holdings Inc. (NYSE:CNK -- $17.75) engages in the motion picture exhibition business. Cinemark will report its Q4 earnings of 2021 before the open today.

Ecovyst Inc. (NYSE:ECVT -- $9.99) provides specialty catalysts and services in the United States, the Netherlands, the United Kingdom, and internationally. Ecovyst will report its Q4 earnings of 2021 before the open today.

Evergy Inc. (NYSE:EVRG -- $60.59) engages in the generation, transmission, distribution, and sale of electricity in Kansas and Missouri, the United States. Evergy will report its Q4 earnings of 2021 before the open today.

Foot Locker Inc. (NYSE:FL -- $41.41) operates as an athletic footwear and apparel retailer. Foot Locker will report its Q4 earnings of 2021 before the open today.

Gray Television Inc. (NYSE:GTN -- $20.25) owns and/or operates television stations and digital assets in the United States. Gray Television will report its Q4 earnings of 2021 before the open today.

Icahn Enterprises L.P. (NASDAQ:IEP -- $54.30) operates in investment, energy, automotive, food packaging, metals, real estate, home fashion, and pharma businesses in the United States and Internationally. Icahn Enterprises will report its Q4 earnings of 2021 before the open today.

ImmunoGen Inc. (NASDAQ:IMGN -- $5.11) develops antibody-drug conjugate (ADC) therapies to treat cancer. ImmunoGen will report its Q4 earnings of 2021 before the open today.

Lamar Advertising Co. (NASDAQ:LAMR -- $112.76) is one of the largest outdoor advertising companies in North America. Lamar Advertising will report its Q4 earnings of 2021 before the open today.

LendingTree Inc. (NASDAQ:TREE -- $100.36) operates online consumer platform in the United States. LendingTree will report its Q4 earnings of 2021 before the open today.

Li Auto Inc. (NASDAQ:LI -- $27.36) designs, develops, manufactures, and sells smart electric sport utility vehicles (SUVs) in China. Li Auto will report its Q4 earnings of 2021 before the open today.

ModivCare Inc. (NASDAQ:MODV -- $101.30) provides a suite of integrated supportive care solutions for public and private payors and patients. ModivCare will report its Q4 earnings of 2021 before the open today.

Northwest Natural Holding Co. (NYSE:NWN -- $46.97) provides regulated natural gas distribution services to residential, commercial, industrial, and transportation customers in Oregon and Southwest Washington. Northwest Natural will report its Q4 earnings of 2021 before the open today.

Pinnacle West Capital Corp. (NYSE:PNW -- $67.38) provides retail and wholesale electric services primarily in the state of Arizona. Pinnacle West will report its Q4 earnings of 2021 before the open today.

Qurate Retail Group Inc. (NASDAQ:QRTEA -- $6.07) engages in the video and online commerce industries in North America, Europe, and Asia. Qurate Retail Group will report its Q4 earnings of 2021 before the open today.

Ranpak Holdings Corp. (NYSE:PACK -- $26.41) provide product protection solutions for e-commerce and industrial supply chains in North America, Europe, and Asia. Ranpak will report its Q4 earnings of 2021 before the open today.

The E.W. Scripps Co. (NASDAQ:SSP -- $22.06) operates as a media enterprise through a portfolio of local and national media brands. Scripps will report its Q4 earnings of 2021 before the open today.

Sempra Energy (NYSE:SRE -- $134.23) operates as an energy-services holding company in the United States and internationally. Sempra Energy will report its Q4 earnings of 2021 before the open today.

Starwood Property Trust Inc. (NYSE:STWD -- $23.48) operates as a real estate investment trust (REIT) in the United States and Europe. Starwood Property Trust will report its Q4 earnings of 2021 before the open today.

Strategic Education Inc. (NASDAQ:STRA -- $50.05) provides post-secondary education and non-degree programs. Strategic Education will report its Q4 earnings of 2021 before the open today.

U.S. Silica Holdings Inc. (NYSE:SLCA -- $11.80) produces and sells commercial silica in the United States. U.S. Silica will report its Q4 earnings of 2021 before the open today.

Uniti Group Inc. (NASDAQ:UNIT -- $11.20) is engaged in the acquisition and construction of mission critical communications infrastructure. Uniti Group will report its Q4 earnings of 2021 before the open today.

PNM Resources Inc. (NYSE:PNM -- $44.82) provides electricity and electric services in the United States. PNM Resources will report its Q4 earnings of 2021 after the close today.

Please note that earnings are expected from Berkshire Hathaway Inc. (NYSE:BRK) on Saturday, February 26.

Looking ahead to next week, March will definitely be coming in like a lion next week, with plenty of economic indicators on deck and a few corporate earnings still trickling in, too. A deluge of jobs data will keep investors busy, as Wall Street sifts through February's ADP employment report and nonfarm payrolls for clues on how the workforce is recovering from this winter's omicron variant. Several important inflation readings will also be on tap, including the Chicago purchasing managers' index (PMI), and the final Markit manufacturing PMI. 

Earning season is finally winding down, but not before reports are released by AMC Entertainment (AMC), American Eagle (AEO), AutoZone (AZO), Best Buy (BBY), BJ's Wholesale (BJ), Dollar Tree (DLTR), Domino's Pizza (DPZ), Hostess Brands (TWNK), Kohl's (KSS), Kroger (KR), Lucid Motors (LCID), Nordstrom (JWN), Novavax (NVAX), Salesforce.com (CRM), Target (TGT), Urban Outfitters (URBN), and Zoom Video (ZM).

All economic dates listed here are tentative and subject to change.

The covered call options strategy is available when you own 100 shares of a stock and then promise to sell your shares by writing a call option. In exchange for promising to sell your shares, you are paid a premium by the call buyer. The covered call strategy is often used within retirement accounts to generate income and act as a hedge to downward moves in stocks.

The covered call is generally the first option strategy long-term investors use because the only risk added to the portfolio is potentially being forced to sell their shares at a higher price. Covered calls are also typically the first level of options that will be approved by a broker on a trading account. While this strategy may not be the greatest fit for a younger investor, people who are nearing retirement might welcome this sale of their stock, especially when they collect income on top of the sale of the stock.

A Simple Example of a Covered Call

Covered calls can be a bit confusing to wrap your head around at first, but it is quite an easy strategy to use. To simplify this strategy, let’s look at an example using the stock AAPL.

Let’s assume that you own 100 shares of AAPL stock at $100 per share. You can sell a $120 strike call on AAPL that expires in 30 days and receive $100 ($1 per share) in premium. No additional money is tied up to make this trade, but you are obligated to sell your shares at $120 even if it goes higher than this.

Two things can happen after placing this trade: 1) AAPL stays below $120 at the end of 30 days, and you keep your shares and the $100 as income or 2) AAPL goes above $120 per share at the expiration date, and you are forced to sell your 100 shares at $120 per share and still get to keep the $100 income.

Regardless of the scenario, you get to keep the $100 as income in your account, as if it was an unqualified dividend payment

The Downside to Selling Covered Calls

When learning about any type of options strategy, you must be aware of any additional risks you are taking with your portfolio. Covered calls do not require any additional capital, given that you have 100 shares or more of a company in your account, but this does not mean there is no risk added. The worst thing that can happen when you sell a call is the stock goes far above the strike price at which you promised to sell your shares.

So, with our example, let’s say that AAPL went all the way up to $200 and you were short a $120 strike call. You would miss out on $80 per share worth of gains. Sure, you still make money, but when you look inside your account, you will see a huge unrealized loss on the call option that you sold. So, to recap, your account value went up, but you still lost money by selling the call option. You just made more on the shares you own to cover the losses on the call.

Important Takeaways Before Trading Covered Calls

Learning how to trade the covered call is one of the best ways to introduce yourself to the world of options. Whether or not you decide to use them actively, understanding the opportunities involved can be a game-changer for your portfolio. This strategy can be very useful when you are long 100 shares of stock, and you believe that the stock is overvalued but you do not want to sell any of your shares.

If you decide to sell a covered call and you are right and the stock falls then you hedge yourself on the way down and receive some cash to potentially buy more shares. Even if you are wrong and the stock continues up there is a good chance that you are still going to make money. Option selling strategies generally do not require you to be great about picking a direction in which the stock will move since you are receiving income regardless of what happens.

Illumina, Inc. (NASDAQ:ILMN) was last seen down 0.4% at $313.90 and earlier hit its lowest level in over a year, extending its year-to-date deficit to 17%. Like most of the market, ILMN has seen a pretty dramatic selloff during the past couple weeks, with its recent rebound attempt squashed by the 30-day moving average.

Short-term options bulls are targeting the sinking stock. This is per ILMN's Schaeffer's put/call open interest ratio (SOIR) of 1.22, which stands in the 75th percentile of its annual range. In other words, these players have rarely been more put-biased during the past year. 

Nonetheless, the biotech company posted a 40% increase in revenues and a 16% increase in net income for fiscal 2021. Illumina is also expected to deliver a 26% increase in earnings and a 14.5% increase in revenues for fiscal 2022.

Illumina stock doesn’t offer the most appealing outlook from a fundamental point of view beyond its expected growth next year and its fiscal 2021 figures. In recent years, ILMN’s growth has fluctuated, most notably experiencing a 9% decline in revenues and a 35% decrease in net income for fiscal 2020. Although Illumina's revenues have recovered, its net income is still down 24% since fiscal 2019.

In addition, Illumina stock has an extremely high valuation. trading at forward price-earnings ratio of 75.76 and a price-sales ratio of 10.41, which are both rich values even for a long-term growth play.

A cash-secured put is an income options strategy that involves writing a put option on a stock or ETF and simultaneously putting aside the capital to buy the stock if you are assigned. In simpler terms, it is when you write a contract where you promise to purchase 100 shares of stock in exchange for being paid a premium. This strategy can be used to generate income while simply obligating yourself to purchase a stock that you would already like to own anyway.

Example of a Cash-Secured Put (CSP)

The concept of this strategy can seem confusing at first, but once you see a real example it becomes a lot easier to understand. Let’s make a theoretical scenario using the stock AAPL.

• Let’s assume that AAPL is trading at $100 per share
• You can sell an $80 strike CSP that expires in 30 days and receive $100 ($1 per share) in premium.
• You will be forced to set aside $8,000 in case you have to purchase the shares
• Two things can happen with this trade:
  • AAPL stays above $80 at the end of 30 days, and you simply keep your $100 as income
  • AAPL is below $80 on expiration, and you are forced to buy 100 shares of AAPL at $80 per share and you get to keep the $100

Worst Case Scenario When Selling Cash-Secured Puts

When learning about option strategies you must always be aware of the largest loss you can incur or simply the worst-case scenario. If you educate yourself about the risks of cash-secured puts you should have no problem with even the worst outcome which is getting assigned 100 shares of stock at the strike price.

Option selling strategies can often get a bad rap because without the proper knowledge of notional value, you can easily over-allocate your account and face large losses. However, if you are simply selling cash-secured puts you are not using any margin at all! The only problem with over-allocation that comes about when selling options is when you do not have the capital to cover the cost of assignment. Some brokers allow you to only put up just 20% of the required capital to cover assignment initially when selling put options which can give people a false sense of security of what they are risking.

Once you become a more seasoned trader, a little bit of margin usage is fine if you know how to manage your risk effectively. As a beginner, it can be a great idea to stick with cash-secured strategies so that you have no way of getting a dreaded margin call in the worst-case scenario where stocks crash hard.

Cash-Secured Put Trading Tips

Only trade liquid stocks

• Make sure the bid-ask spread is no larger than 10-20 cents wide
• The ETF ‘SPY’ has the most liquid options and generally has a tight penny-wide spread

Don’t sell cheap contracts

• If you sell a put and only collect $.05, eventually fees will negate profits
• Weekly options may expire sooner but since you are trading them more often you will incur more fees

Take profits early

• As opposed to letting options expire worthless, you can close them before expiration to lock in profit and collect more premium
• It is better to forfeit a small amount of premium instead of letting the option completely expire

Important Takeaways Before Trading Cash-Secured Puts

Writing cash-secured puts is one of the best ways to learn how options work without the risk of a margin call. You will be able to sleep well at night and be able to learn how options move based on what happens with the stock market. However, options were made to efficiently leverage your account without paying margin interest. Once you become comfortable trading cash-secured puts you can think about utilizing margin to increase your returns.

Quaker Chemical Corp (NYSE:KWR) is down 3.4% to trade at $188.69 at last check, and earlier hit a roughly annual low of $189.50. This negative price action comes ahead of the company's fourth-quarter earnings report, due out after today's close. Below, we will dive into KWR's technical setup, in addition to its previous post-earnings activity.

Digging deeper, the equity today breached a familiar floor at the $195 level, which had been supporting the shares since late January. Additionally, the security is now pacing for its fifth-straight daily loss, guided lower by the 30-day moving average. Year-over-year, KWR carries a 35.7% deficit. 

The equity has a generally positive history of post-earnings reactions, finishing five of eight next-day sessions higher over the past two years, including a 10% jump in May 2020. Options traders are pricing in a 7.5% swing for KWR this time around, which is higher than the 4.4% move it averaged following its last eight reports, regardless of direction.

Shorts have been piling on the security ahead of the event. In fact, short interest added 5.3% in the most recent reporting period, and the 1.48 million shares sold short account for 11% of KWR's available float, or nearly five weeks' worth of pent-up buying power.

The options pits are similarly pessimistic. This is per the equity's Schaeffer's put/call open interest ratio (SOIR) of 3.05, which sits in the 80th percentile of annual readings. This suggests short-term options traders have rarely been more put-biased in the past 12 months.

From a fundamental point of view, Quaker stock has a relatively high valuation, trading at a forward price-earnings ratio of 24.81, and a price-sales ratio of 2.18. The chemical company's balance sheet is also weak, with only $136.79 million in cash and roughly $926 million in total debt.

However, KWR's revenues are up 96% since 2018, while net income is up 155%, after experiencing a 47% decline in net income for 2019. The company has also increased its trailing 12-month revenues and net income by 20% and 282%, respectively, since 2020.

Plus, Quaker Chemical stock has analysts estimating revenue growth of 7.1%, and earnings growth of 14.56% for 2022. This potentially set ups KWR as an option from a long-term growth and value perspective, should its price continue falling in the short-term.

March will definitely be coming in like a lion next week, with plenty of economic indicators on deck and a few corporate earnings still trickling in, too. A deluge of jobs data will keep investors busy, as Wall Street sifts through February's ADP employment report and nonfarm payrolls for clues on how the workforce is recovering from this winter's omicron variant. Several important inflation readings will also be on tap, including the Chicago purchasing managers' index (PMI), and the final Markit manufacturing PMI. 

Earning season is finally winding down, but not before reports are released by AMC Entertainment (AMC), American Eagle (AEO), AutoZone (AZO), Best Buy (BBY), BJ's Wholesale (BJ), Dollar Tree (DLTR), Domino's Pizza (DPZ), Hostess Brands (TWNK), Kohl's (KSS), Kroger (KR), Lucid Motors (LCID), Nordstrom (JWN), Novavax (NVAX), Salesforce.com (CRM), Target (TGT), Urban Outfitters (URBN), and Zoom Video (ZM).

Below is a list of key market events scheduled for the upcoming week. All economic dates listed below are tentative and subject to change.

The final day of the month, Monday, Feb. 28, will bring trade in goods data and the Chicago PMI.

Investors will transition into the new month with data on construction spending on Tuesday, March 1. The ISM manufacturing index and the Markit manufacturing PMI are also due out. 

The Federal Reserve's beige book will come out on the afternoon of Wednesday, March 2, while the ADP employment report will be out bright and early that day.

Thursday, March 3 is set to be a busy one, with initial and continuing jobless claims, as well as the fourth quarter's productivity revision and unit labor costs revision data all out before the bell. Following the market's open, February's Markit services PMI will be released, followed by the ISM services index, data on factory orders, and core capital equipment orders. 

The week will wrap up on Friday, March 4 and feature nonfarm payrolls data, the unemployment rate, average hourly earnings, the labor force participation rate, and info on consumer credit.