Showing posts with label AAPL. Show all posts
Showing posts with label AAPL. Show all posts

Tuesday, May 10, 2022

AAPL rolled another Apple call

Underlying Security Symbol: AAPL











MM MoneyMadam 

Data from and Marketxls

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Thursday, March 31, 2022

Best Options YTD - quarterly review

Underlying Security Symbol: QCOM, NUE, AA, BBY, AAPL, DOW, PSX


The quarter ends today and I looked at the calls I wrote year to date.  I'm interested in looking at which stocks created the most income from call premiums during the quarter.  As my premise that concentrating your holdings provides for more opportunity to create income and yet maintain a position in those stocks around which you want to build your income portfolio

I sold 140 calls year to date.  I sold them on 25 different stocks.  I created $33,000 of call premium income.  24% of that income came from just two stocks and the next 20% came from three additional stocks.  The chart below shows the number of calls per stock but I parsed the data to include only those stocks on which I sold 3 or more calls.








The first of the two stocks that created the most call option income is QCOM.  Qualcomm is a chip maker and is doing poorly from a capital gains point.  It pays a 1.72% dividend yield.  Even though chip makers are under pressure, I have been able to sell calls, and although a few have been assigned, I continue to maintain a significant position on which I intend to continue to sell calls.

The second of the two stocks, is NUE. Nucor is a steel company.  It is doing very well and pays a .87% dividend yield.  As an income investor, I need NUE to create significant call premium income; otherwise I am wasting a chunk of money that could be creating more income.  NUE has been more active than QCOM, many contracts have been assigned and I have had to add to maintain a position.  Due to the demand for steel, I will stick with this holding as long as the calls are good.

The next three stocks are AA,  AAPL, and BBY.  Like Qualcomm, and Nucor, Alcoa and Apple pay paltry dividends but Best Buy pays a better yield just above 2%.  

The chart below shows the income per stock on those positions where I sold 3 or more calls.








Five stocks are high dividend yielders.  These are:  IBM 4.97%, GILD 4.72%, MDC 4.6%, PSX 4.36% and DOW 4.36%.   IBM, Gilead and MDC are dead money so being able to boost income above and beyond the dividend is important to me.  Each of these three has a chance to deliver capital gains. We get paid nicely to wait which makes them a hold for me. 

PSX and DOW are true winners.  The catalyst for their growth is energy for PSX and chemicals for DOW.  All are in demand right now.  PSX and DOW are a strong hold for me and I may accumulate to make sure I maintain a position while still boosting my income from call premiums.

It is notable that the concentration of call frequency and call income does not seem to correlate to dividend yield.  I do think this assessment confirms my thesis that having multiple options on a single position is valuable.  Better to sell calls on 20 or 25 stocks than one call on 80 stocks.

Use covered calls to boost your income.  MoneyMadam MM

Data from and Marketxls

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Thursday, March 3, 2022

Couldn't Resist a Bite of the AAPL 15%

Underlying Security Symbol: AAPL


In January 2022 I truly nibbled at AAPL and filled a lot with a basis of $160.  

Patient investor that I am, I waited for the right call and there it was today.  $180 strike price, with an expiration on May 20, 2022.  This also should provide the dividend of $.22.  We anticipate an ex-dividend date on May 2, 2022.

I just couldn't resist this income and I am willing to wait for Apple.  Should it go down again, I may add again or I may just wait for the call options friend named volatility to sell another call.









Simple, good income investing.

MM  MoneyMadam



 Data from and Marketxls 

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Tuesday, March 26, 2019

Income investor view of five stocks buying back shares

I am always interested to learn how stocks  use their cash. When I saw this article on stock buy backs, I decided to look at the stocks mentioned through the eye of an income investor.

  •  Stock buy backs reduce the number of shares for ordinary investors which could lead to stock price inflation
  • Income investors prefer dividend increases to stock buy backs
  • Stock buy backs can cause stock ownership to be concentrated among a small group of investors 
  • Solid dividend machine fundamentals remain the best metrics for successful income investing.

Stock buy backs strong in fourth quarter 2018.  The full Reuters report can be viewed here:


The five issues with the highest total buybacks for Q4 2018 are:

  • Apple (AAPL) led in buybacks, spending $10.1 billion in Q4 2018, down from $19.4 billion spent for Q3 2018. Its Q4 2018 expenditure ranked 19th highest historically; for the year, Apple spent $74.2 billion on buybacks, up from 2017's $34.4 billion; over the five-year period the company spent $229.0 billion, and $260.4 billion over the 10-year period.
  • Oracle (ORCL): $10.0 billion for Q4 2018, down from $10.3 billion for Q3 2018; 2018 was $29.3 billion, up $4.0 billion in 2017.  
  • Wells Fargo (WFC): $7.3 billion for Q4 2018, slightly down from the $7.4 billion spent in Q3 2018; 2018 was $21.0 billion, up from $10.3 billion in 2017.
  • Microsoft (MSFT): $6.4 billion for Q4 2018, up from $3.7 billion for Q3 2018; 2018 was $16.3 billion, up from $8.4 billion in 2017.
  • Merck (MRK): $5.9 billion for Q4 2018, up from $1.0 billion for Q3 2018; 2018 was $9.1 billion, up from $4.0 billion in 2017.
Buy backs are an interesting aspect of the market.  Buy backs are touted as benefiting the stock owner.  With fewer shares in the open market, your shares should be worth more money.

As an income investor, I would prefer the company pay or increase my dividend.  Some companies use a lot of debt to buy back shares such as Home Depot, symbol HD. Is it worth it to leverage the balance sheet to run up the value of the stock?

Stock Buybacks and Stock Market Inflation

For ordinary investors, stock buy backs are more problematic on a macro scale.  When you have too much money chasing too few goods which in this case we are talking about stocks, the price of the goods goes up.

The income investor class is growing as baby boomers retire and look to live off the income their money makes instead of living off the income their jobs provide.  Lots of money chasing only a few investments that pay income makes for price inflation.

We have price inflation on dividend stocks and price inflation on fixed income such as municipal and corporate bonds.   We are faced with price inflation on every income option. 

In a healthy economy we want ordinary investors to be able to own stock in the companies that affect their lives.  We don't want ownership concentrated in just a few hands even if that is the teachers pension plan.

An income investors view of these five stocks

Let's look at these five stocks and see if despite fewer shares being available they are still good investment options.

We income investors start with how these five stocks compare on dividend machine fundamentals.  You can find my Dividend Machine criteria here:

As you can see, Oracle is a bit high on debt and low on yield but once they decided to share some money with their investors, the dividend growth is very good.  All stocks except Merck have a very safe payout ratio which means the dividend and the dividend growth rate is safe.

Of the five stocks noted above, only Oracle, has piled on debt recently.  Yet their debt to equity ratio is not even close to HD.    See the graph below.  The other stocks have very reasonable debt levels so balance sheet quality is not an issue with them.  They could pay us a dividend just as easily as buying back stock.  All stocks provided very good dividend growth over the past three years with Oracle being the best dividend growth stock of this group.

In this case, perhaps Oracle's debt increase funded dividend growth rather than stock price appreciation.  We will look at other metrics later in this post.

Oracle's increasing debt load.

Let's now look at how their stock prices have performed during the time they were paying out dividends and buying back stock.

Microsoft, MSFT, is the winner on price appreciation with Wells Fargo the laggard.  Eighty percent is a pretty good average for picking growth stocks no matter what the reason for the price increase.

Let's look at the earnings growth over the same period of time.  Perhaps earnings are the catalyst for growth in stock price.

Notice that EPS and price increases are the common element for the leader of this group which is Microsoft.

My conclusion is that while stock buy backs may not be the best for the ordinary investor on a macro scale, I don't think stock buy backs are any reason to buy a stock or to avoid a stock.

Good fundamentals including solid balance sheet, increasing earnings per share, a dividend and dividend growth are still the income investor's best metrics for successful investing.

M* MoneyMadam

Disclosure:  Long MSFT, AAPL,

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