Wednesday, April 29, 2015

Willing to lose MSFT

Microsoft, symbol MSFT, has been a part of my portfolio since it sunk to under $30 in late 2012.  I loaded up and have unwound my position by selling covered calls most of which have been called away.

Several $50 covered calls have expired and I am willing to try that strategy again with my remaining shares of MSFT.

MSFT July $50 strike price analysis

I prepared two tables below that show the gain from selling calls on those final shares if they are called away.   Also if they are not called away, I will supplement the dividend income (which is only about 2.5%) with covered call income.

The second table shows that to do this trade today, using today's cost basis, is not very lucrative.  However, that trade would deliver nearly a five percent gain in just 79 days if the stock is called away.  If it is not assigned, then you get a dividend stock upon which you can sell future covered calls.

Consider this strategy for positions that have appreciated and provide minimal dividend yields but have covered call potential. 


Disclosure:  Long MSFT with calls