Monday, June 25, 2018

Intel worries

Intel has been part of my life for a long time.  Their company culture was always top line.  While they face technology challenges with their new chips, I am not worried that INTC will go out of business.  However, the stock has had a nice run and the summer doldrums are here.

However, as an income investor INTC's dividend of just over 2.3% is not exactly compelling.  Before the news of Krzanich's resignation, I added to INTC on what I thought was weakness.  June 21, I bought 128 shares at $52.25.    I reinvest INTC's dividend and I wanted to fill out a "lot" so that I could sell calls on 2 lots.  

While it seems counter-intuitive to sell calls when the market is selling off (right now the DOW is down over 400 points,) I wan to try to get my money back on that most recent buy.

INTC is selling just above $50 today.  I am selling a call on the reinvested shares and the 128 shares I added.  This means I sold 2 contracts.

I selected an expiration date after the next expected ex-dividend date of August 3, 2018.  The best call I could find was  $52.50 strike, with an expiration on 8/17/2018 and a premium of $1.42.  The table below shows how it worked out.

I don't really want to unload all my INTC.  My cost basis on my other shares is under $20.  If I have to keep the 200 shares with a cost basis of about $52, I will be getting the dividend.  If they take my shares, I got a quick 3.77% gain in under a month.   I can live with that.

M* MoneyMadam
Disclosure:  Long INTC with calls