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On Wednesday of this week, the Postmaster General, Patrick Donahoe, made the announcement that many of us had been expecting for years as the red ink lived up to its a visual onomatopoeia name and hemorrhaged.

No more Saturday delivery for ordinary mail. Unless I'm going away to summer camp this year, I'm not anticipating any extended grieving period for the loss, although like so many other things, the principal wags the principle.

It was a major news story in an otherwise slow news week. Surprisingly, what had gone unnoticed was the additional comment that effective immediately, gloom of night would be sufficient cause to suspend delivery. Rain and snow are now also potential impediments to service, regardless of a centuries-old social contract.

It's a new world.

Forget about social contracts or expectations of behavior. Although if you follow the stock market, you're probably accustomed to broken dreams and hopes, and rarely come to expect the expected.

Increasingly, data is ignored for its objective and descriptive properties. For example, when The Gap (NYSE:GPS) announces great quarterly sales, as it did this week, its shares fell 4%, despite everyone agreeing that the results were extraordinary.

Equally common is the incredible emphasis now placed upon guidance, as if those issuing guidance have any greater ability to read the future than does the head of a close knit household. As much as I thought I knew about my family, I don't think I ever guessed anything correctly, even a day into the future.

Have you ever visited a physician's office and browsed through some dated magazines? As it turns out, with near universal application, those whom we consider to be futurists have a fairly poor track record. Yet, when it comes to guidance, it is the closest thing we have to the gospel, and fortunes are made or lost on the basis of the prognostications of people every bit as flawed as the guy you ignore on the subway platform every day.

For me, the past few weeks have broken some personal and inter-personal social contracts. As a die hard covered option investor, risk is the antithesis of everything I value. But as the market has been climbing higher and higher, it's become harder and harder to find new places to park money. Additionally, the reduced premiums resulting from reduced volatility make it harder to live that lifestyle to which I've become so accustomed.

That means only one thing, and the devil has to be embraced.

Over the past few weeks, I've had difficulty finding well priced and conservative investments that would feed my insatiable appetite. As a result, there have been more high beta names and more earnings related plays, not to mention lots more antacids. But sometimes you just do what has to be done.

This coming week looks to be a little different, thanks to some market hesitancy. Blame it on Europe, blame it on Draghi, or just blame it on burnout, I don't really care, because as bad as we are at telling the future, we're at least equally as bad at recognizing causation and correlation. It's not like pornography. You don't necessarily know it when you see it. But for whatever reason, this week, unlike the preceding month, it seemed easier to spot some lesser risk potential investments

As always, stocks are categorized as being either Traditional, Momentum, Double Dip Dividend or "PEE" (see details).

BP (NYSE:BP) has no shortage of legal issues still awaiting it. To me, it's mind-boggling that judgments and fines of $20 billion could possibly have come as good news, but that is how news is interpreted. For some, perhaps more rational, BP's inability to have its share price keep up with the likes of its partners in evil, Halliburton (NYSE:HAL) and Transocean (NYSE:RIG), is a sign of the legal liability overhang.

(click to enlarge)

For me, it is finally down enough that I am interested in re-purchasing shares last owned a month ago, which to me seems like an eternity, since at the moment I own neither its shares, nor Halliburton or Transocean, usually mainstays of my portfolio.

As long as we're on the energy theme, Southwestern Energy (NYSE:SWN) was a potential selection from last week that went unrequited. At this level, it still looks like a reasonable trade and resultant ROI after selling an in the money option, in a market that may be taking a little break

The Limited (LTD) is one of those retailers that I never seem to own often enough, which is odd since I'm a serial re-purchaser of stocks that I've owned and that subsequently are assigned due to the use of covered calls. It has a good dividend, including regular use of special dividends and trades in a reasonably tight range. During the final week of a monthly option, it becomes a bit more appealing to me. However, if not assigned next Friday and faced with owning shares for at least an additional month, it does go ex-dividend early in the March 2013 option cycle. Although I own more retailers than I would like at the moment, this is one for which it may be worth bending some diversification rules.

DuPont (NYSE:DD) was one of those stocks that I regularly owned when I first started selling options. A combination of good premiums, reliable dividends and price appreciation, especially after early 2009, made it a great income generator. These days, lower volatility has taken its toll on the premiums, and the availability of only monthly options has made me look elsewhere. However, this week DuPont goes ex-dividend, and as the final week of the monthly option cycle, it effectively trades as a weekly option, although you have to be prepared to own it through the next cycle or longer.

Walter Energy (NYSE:WLT) and Cliffs Natural Resources (NYSE:CLF) seem to go hand in hand in the speculative corner of my portfolio. It goes ex-dividend this week and always offers a nice option premium in exchange for the risk that is being taken on. A caveat that should be considered for adding new shares is that if shares are not assigned by the end of the week, Walter Energy reports earnings the following week, and that may be more excitement than many would want to accept. Writing a deeper in the money call or a longer duration call may be strategies to reduce that kind of stress.

Baidu (NASDAQ:BIDU) is one of the very few Chinese companies that I ever consider purchasing. I do, however, miss the days when Muddy Waters would live up to its name and cast aspersions on the accounting practices of some Chinese companies. That always represented a good opportunity to sell puts a few days later, and then merrily go on your way when the waters calmed. Someday, I'm fairly confident that most, if not all, of the fears that we have regarding accounting practices will become reality. I'm hopeful that it's not this week, as I already own shares of Baidu by virtue of being assigned $97.50 puts on Friday (February 8, 2013). If you don't mind wild swings within a 10% range on a seemingly regular basis, Baidu is a good way to generate income. My experience with shares has been that a moment or two after its price performance looks bleak, it bounces right back. It is a good example of why gloom shouldn't be a deterrent, but I doubt the Postmaster General is paying any attention to me.

Riverbed Technology (NASDAQ:RVBD) was a potential earnings choice last week. As usual, its price movements tend to be exaggerated after it announces earnings, particularly since they tend to give pessimistic guidance. Back in the old days, you would give pessimistic guidance, and then shares would soar when earnings surpassed the forecast. That was so yesterday's social contract. Riverbed reported record revenues and in-line EPS data, but offered a weak outlook. So what else is new? Its shares have been one of my greatest option premium producers for years, and I look for every opportunity to either own shares or sell puts.

Buffalo Wild Wings (NASDAQ:BWLD) is one of those places that I would love to visit, but know that it may not be worth trading off a few years of my life. It is also one of those companies that tends to have exaggerated moves following earnings releases. In this case, about 1.4% for a 10% drop in share price. The biggest caveat is that Buffalo Wild Wings has shown that it can easily drop 15% on an earnings release.

Cliffs Natural Resources is not for the faint of heart. It bounces around on rumors of the Chinese economy's well being and global growth. It is a good example of forecasters' inability to forecast, as it recently fully recovered from a recent major downgrade from Goldman Sachs (NYSE:GS), which at least was consistent in demonstrating that predicting commodity prices was not one of its strengths. On top of its usual volatility, Cliffs Natural reports earnings this week, and has yet to announce its next dividend, which is currently at nearly 7%. I already own shares and have done so on and off for a few months. If I did anything, it would most likely be through the sale of well out-of-the-money puts, seeking to return 1-1.5% for the week.

Finally, it's yet another retailer, Michael Kors (NYSE:KORS), and it is a difficult one to ignore, as it reports its earnings this week. As with most all "PEE" selections, it is very capable of making large moves upon releasing earnings and providing guidance. In this case, the ratio that may lure me into committing to another retailer is a 1% ROI in exchange for a 10% or less drop in share price.

Traditional Stocks: BP, Southwestern Energy, The Limited

Momentum Stocks: Baidu, Riverbed Technology

Double Dip Dividend: DuPont (ex-div2/13), Walter Energy (ex-div 2/15)

Premiums Enhanced by Earnings: Buffalo Wild Wings (2/12 PM), Cliffs Natural (2/13 PM), Kors (2/12 AM)

Remember, these are just guidelines for the coming week. Some of the above selections may be sent to Option to Profit subscribers as actionable Trading Alerts, most often coupling a share purchase with call option sales. Alerts are sent in adjustment to and consideration of market movements, in an attempt to create a healthy income stream for the week with reduction of trading risk.

Some of the stocks mentioned in this article may be viewed for their past performance utilizing the Option to Profit strategy.

Disclosure: I am long BIDU, GPS, WLT, CLF, and I may initiate positions or sell puts in BP, BWLD, DD, KORS, LTD, RVBD and SWN. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Source: Gloom Of Night