I sold a call today on those new shares. I picked a strike price of $60 so if I am called away, I make capital gains. If I am not called away, I pocket the premium.
I picked an expiration date after the next ex-dividend date which is May 6, 2020. Provided my shares are not called away before the next ex-dividend date, I get to pocket the dividend and the premium.
Looking at INTC's fundamentals, I am willing to risk not losing the shares even though I am underwater for now because I am adding a quality stock with low debt and a reasonable dividend yield.
With the market so very volatile, there is no way to tell how this trade will unfold; let's just see what happens.
INTC Fundamentals
| INTC | Annual EPS | Annual Div |
| Earnings > Dividend | $4.78 | $1.32 |
| Debt to Equity | 0.37 | |
| Dividend Yield | 2.47% | |
| 3 Yr. Rev. Growth | 7.05% | |
| Cash Flow/Share | $7.41 |
Of course all this data will change over the coming months. But even if earnings are cut in half, INTC should still be able to maintain the dividend. Even between 2008 and 2009 INTC was able to increase their dividend 3.2% while earnings were cut by 16% during the same time frame.
Covered call on my cost basis
| Using my Cost Basis | Price on Open | Call Expiration |
| INTC | $53.44 | 5/6/2020 |
| Cost Basis: | 12/3/2019 | $56.00 |
| Strike Price: | $60.00 | |
| Call Premium: | $1.25 | |
| Dividend | 5/6/2020 | $0.330 |
| Call Yield on Basis | 2.23% | |
| Call + Dividend Yield on Basis | 2.82% | |
| $ Gain if Assigned | $5.58 | |
| Max Return if Assigned | 9.96% | |
Covered call on stock if bought today.
| Basis is price on open | Price on Open | Call Expiration |
| INTC | $53.44 | 5/6/2020 |
| Cost Basis: | Price on Option Contract Open | $53.44 |
| Strike Price: | $60.00 | |
| Call Premium: | $1.25 | |
| Dividend | 5/6/2020 | $0.330 |
| Call Yield on Basis | 2.34% | |
| Call + Dividend Yield on Basis | 2.96% | |
| $ Gain if Assigned | $8.14 | |
| Max Return if Assigned | 15.23% | |
This is how you milk a portfolio for income. The premium income from selling this call on INTC provided me with the equivalent of three extra dividends. These are the stocks that retirees should put on their "to buy" list.
