Friday, December 20, 2019

CUK Carnival Cruises 64 day call

I added Carnival Cruises, symbol CUK, over a few weeks in September, 2019.  I sold quick calls on half the position a few weeks after initiating a position.   Today I sold calls on the rest.   The tables below show how this works.

  • Carnival Cruises pays a big dividend 4.23% and if the calls below are not assigned, it is worth it for income investors to hold CUK just for the dividend.
  • One risk is the cessation of dividend increases.  Between 2015 and 2018 dividends doubled but have not increased since February, 2018.
  • Call premiums are rich being equal to or greater than the quarterly dividend.
  • Call options are broad and provide opportunities to roll expiration dates every couple of months.
  • Dividend plus call premiums make CUK a good trade for income investors.

The first table is the original call I sold that expires today and will be assigned.  This call was a 30 day call.  The expiration date was after the ex-dividend so I have already cashed that check.  I will lose this lot but look below and you can see a similar call opportunity available today.




This second table is the call I sold today that expires in 64 days exactly on the day I expect CUK to be ex-dividend.  The calculations assume the dividend will be paid to me and that the stock will be assigned. In this table, I use my personal cost basis.




In the third table is the call I sold today based on opening a long position simultaneously.  So if you bought CUK and then immediately sold a call on your new position.  The cost basis is slightly different than my basis.  This call also mimics the original call I sold in November (see first table.)



The market is not cheap and to me I feel some frivolity.  People are buying stocks today and sometimes that means the options traders will pay a little more for a call option.  When you get paid the hefty dividend that CUK delivers while you wait for capital gains, it is worth investing in a stock.


M* MoneyMadam
Disclosure:  Long CUK with calls

Tuesday, December 17, 2019

Quick 7% on CAT

Executed this quick call today.  Call expiration is 30 days away and falls on same date as CAT's ex-dividend date.  So let's see what happens.  I added shares and sold this call today.





















Quick gain of about 7%.

M* MoneyMadam
Disclosure:  Long CAT with calls

Thursday, December 5, 2019

XOM call activity today

Exxon Mobil

Bought this unloved energy stock and sold calls against it. Love the dividend: yield 5.08%, as I am an income investor, but don't love the price action.

Today's strategy will deliver additional income from the call premium.  If XOM is called away, I also will realize a capital gain.  If XOM is not called away, I will keep this lot in my portfolio provided the dividend is safe.  If the price action improves, I may be able to sell more calls for more income.



M* MoneyMadam
http://www.themoneymadam.com/

Wednesday, December 4, 2019

Adding to LEG and selling calls

As I monitor call activity, I look for stocks that I already own.  Stocks that pay a good and increasing dividend.  Stocks that have a good history of EPS and Revenue growth.

Leggett and Platt, symbol LEG, is one of those stocks.  Let's first look at the recent fundamentals.


Source:  Nasdaq.com
























You can see clear evidence of revenue growth, EPS (earnings per share) growth, and dividend growth.   And in the next table you will see call option potential.



















I have a significant position in LEG but I added today and am selling calls against that new position.  I picked a strike price that nudges up to the 52 week high of just over $55.00.   If they take it, I still have my original position.  If they don't take it, I get to pocket both the dividend and the call premium.

That is my strategy to retire with income that grows; and I am sticking with it.

M* MoneyMadam
Disclosure:  Long LEG with calls on part of the position

Monday, December 2, 2019

Covered call activity on WMT

This call is strictly for short term cash generation.  WMT's high is $125.  I am buying today and selling this 47 day call to boost income plain and simple.   If I lose WMT, that is ok by me. If I keep it, I will cash the dividends and I will continue to sell calls.  You have to hurry if you want to capture the 12/5 dividend. 
























M* MoneyMadam
Disclosure:  Long WMT with calls on some of the position

Covered Call Activity MSFT

A call I executed today.   MSFT is a quality stock with a low yield.  I use covered calls to make up the difference between what MSFT yields and what I need.
























M* MoneyMadam
Disclosure:  Long MSFT with covered calls