Tuesday, June 7, 2022

6.49% Call Option not including dividend

Underlying Security Symbol: QCOM

A bit of a boring trade today.  But then as I always say, during downturns stick to your strategy.  That means nibbling on those stocks that have consistently delivered income for you. QCOM is an example of putting that strategy to work.

I have been nibbling and was 40 shares short of a lot which is 100 shares.   I looked through my list of stocks in which I did not have a full lot.  Then I looked at their call options.  I use my call calculator and just jot down the premium yield and the yield to best which is if the shares are called away.  QCOM had the best yields.

 


 

 

 

 

 

 

 

 

 

 

The yield from this call alone is 6.46%.  If the call buyer takes my shares then my yield to best (the best result I can get from this trade,) is 8.74%.  Even with current inflation between 6 and 8%, this trade provides enough income to beat inflation.

I can never predict which of my calls will expire and which will be assigned.  I chose this call for the income from the premium.  I will not benefit from the 2.12% yield unless the call expires.  My portfolio owns enough QCOM that is benefiting from and reinvesting the dividend that I am not trying to build a position.  I am trying use the opportunity of a down market to fill lots and sell calls for lots of money.

MM MoneyMadam 

Data from Schwab.com and Marketxls

No comments: