Tuesday, January 18, 2011

Qualcomm Option Income

Qualcomm was the topic of  choice on January 18, 2011 where I suggested we buy QCOM at $53.03; sell the April call for $.96; receive the dividend in March of $.19; then sell the stock at the strike price of $57.50. Calculate your income as $57.50 +$.96 +$ .19 = $58.65. Subtract your cost basis from your income and you have a gain of $5.62. Divide the gain of $5.62 by your cost basis of $53.03 and you have a 10.6% return in 3 months.