Tuesday, February 23, 2016

Long Call on Cummins, CMI

For my friends and readers who like to go out further than 90 days on their calls, consider this opportunity.

CMI, buy today mid $97.   Hold until June and receive the dividend of $.9750 in May.  Sell a June $110 call for $1.50 premium.   If your stock is called away your gain is north of 15%.  If you still hold it even at $97.50 your income from the call premium and dividend equals 2.5% in less than 120 days.  

See the table below.

Folks, this is good income investing.


Disclosure:  Long CMI with calls