Tuesday, February 8, 2022

Buy high sell higher - CVX - my favorite call so far today.

Underlying Security Symbol: CVX

 

I established my base position in Chevron, symbol CVX, when oil was out of favor.  Today I added at a much higher basis $135.79.   I immediately sold a call on these new shares.  I picked an expiration date that provides the highest premium income April 14, 2022 66 days away.  I also was mindful of the ex-dividend date which is February 15.   That means the calculations below include the call premium, the dividend, and the potential capital gain should these shares be assigned.

I will still own my base shares as we watch oil trend toward $100 per barrel.  And as we watch international tensions add to potential strains on oil supply.



 

 

 

 

 

 

 

 

 

 

It is always risky to buy high and hope to sell higher.  But, as an income investor, I have to take that risk to book the 2.75% yield (dividend plus premium) for a 66 day period.  Some annualize that return to make themselves feel better.  I do not.  But I do bank the income and look to sell more calls at even higher strike prices and premiums.   

 

Data from Schwab.com and Marketxls 

MM MoneyMadam

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