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How To Trade Whirlpool Into 2023

Dec. 29, 2022 4:18 PM ETWhirlpool Corporation (WHR)22 Comments
Matthew Smith profile picture
Matthew Smith


  • With headwinds looking like they will persist into 2023, we are looking for ways to create some outperformance.
  • Investors can sell covered calls in a way that retains some upside in the stock while also generating a respectable option premium.
  • WHR pays a healthy dividend and with the sale of a covered call one can create a total yield of 9.57% from this holding.

Benton Harbor

Roberto Galan

Whirlpool (NYSE:WHR) has been a name that we have liked for years, and for those who have held it for a few years (prior to the current year) then you know all about the good times with this name. When the

This article was written by

Matthew Smith profile picture
Follow us on Twitter here: @theinvestar Previously a Trader/Portfolio Manager for a Treasury Office managing anywhere from $10-20 billion (treasury assets, retirement benefits, endowment related funds), currently part of a team that oversees an outside investment manager managing almost $30 billion. Previously the founder of theinvestar.com, LLC. theinvestar.com, LLC was a leading news provider on the potash and uranium mining industries supplying data services, commentary, interviews, investment news, newsletters and quarterly industry publications.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of WHR either through stock ownership, options, or other derivatives. 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.

We have positions in WHR and have sold covered calls in both client portfolios as well as personal portfolios.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (22)

Kamikaze Cash profile picture
I like the underlying a lot, and I think this is a good valuation for taking a long position. I can't quite get on board with the deep OTM strike and long time horizon, though. Hitting $180 would make this a strong year for Whirlpool, and I can't quite see it.

I think selling 60-DTE covered calls a few strikes OTM would probably yield a better return, with more realized gains for reinvestment.

This would require some more management, but I'm addicated to trading anyway.
Matthew Smith profile picture
@Kamikaze Cash definitely more management, but so long as the stock doesn't pull back sharply or your shares get called away early on, then yes you should be able to generate larger cash flows...but higher probability of getting called with strike price being closer to current stock price.

And at $180 it would be a good year. This trade was set up to hopefully not get called, but if the shares were called to at least be at a price that we could live with (while generating an option premium upfront that served us well too).

Do it both ways, but for this trade it was serving a purpose for the portfolio.

I like your aggressiveness on the OTM trade.
bengalesq profile picture
Hate Whirlpool here but thanks for the article. I am interested in thoughts on the business here so it grabbed my attention.
Matthew Smith profile picture
@bengalesq Well I appreciate you reading the article!
Good and defensive play. The only risk maybe business turn bad and dividends cut. Not likely to happen but we just faced too many once per thousand years event in the past few years.
Matthew Smith profile picture
@Peter193 Yes, so long as the housing market does not crash and burn this should be a pretty safe play. If mild recession, it is cheaper to buy new washer/dryer or some kitchen appliances rather than doing entire renovation project.
Interesting thought. It’s kind of far out from here though. I have been selling some puts at 30 days and generating about $4.70 per share premium plus the dividend is kind of nice. If it goes down to my 137 put strike price which it very well-may then I will have a basis of around 132.30. And, my annualized rate of return on invested capital on that is is about 40%. And at that price I’m glad to own the stock if I get assigned the shares. And I already own some of the stock.
@benet1800 @Matthew Smith I've also been selling PUTs. Got assigned early this year but then sold the stock to close the position quickly. Right now my income is $2,700 (on the PUTs) with one open short PUT that is $3.10 OTM. That incomoe is in 9 months of trading.

The covered CALL idea is good and profitable with the dividend included. However, I have doubts about this stock going up next year and I think I can make more with the short PUTs. But this was a good article on what to do if it gets assigned to me again. I am fairly aggressive with short PUTs on this stock. I doubt it has much lower to go, but that depends on the economy next year.
Matthew Smith profile picture
@benet1800 It is pretty far out, but that plays into the fact that not all portfolios are trading portfolios. So this is a trade for what figures to be a long-term position, so well OTM and decent time on it to generate the required premium to justify everything. Helps with portfolio management sometimes too by forcing you to exit at a given price (which was predetermined based off of your research).

We have used puts on this name before and yes, they can generate decent option premiums, but you cannot go too far OTM. Also, be aware that these are not heavily traded and spreads are wide - like all the time!

Nice returns on your trades though!
Matthew Smith profile picture
@Marod not bad so far. puts can generate more income right now based off of the market, but also generally speaking - especially if you have a margin account and are not really tying up cash but rather buying power....not always the case, but right now the premiums favor puts
OverTheHorizon profile picture
Average refrigerator lasts 10-15 years. Probably be able to get a couple of more years out of the old one until economy is less uncertain:
@OverTheHorizon Ha! My refrigerator (ironically not a Whirlpool) is 17 years old and starting to show its age. It's also the oldest appliance in my kitchen. My wife takes your view...."Let's keep it a bit longer." I, on the other hand, am ready for a change...refrigerator, not wife. 😉
OverTheHorizon profile picture
@nckadams both?
@OverTheHorizon No....she's got another 50 years on the warranty.
I don't hold enough WHR to do a covered call, and I'm not inclined to cash secure the difference. Nevertheless, I think your trade suggestion is excellent for those holding a large enough WHR position.
SleepyInSeattle profile picture
@nckadams Likewise.
Matthew Smith profile picture
@nckadams @SleepyInSeattle Thanks for reading and the kind comments. I write about other options trades such as this for other stocks (with lower prices too) so feel free to follow so you can see when articles are published.
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