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.
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
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- 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