FCX provides an interesting opportunity to make a quick 2.29% in less than 60 days.  Buy FCX today at $18.38 and sell an August $20 call for $.42.   Add in the dividend of $.0165 and bingo you made 2.29%.

Of course, two other factors must be considered.  FCX's price could deteriorate and you might suffer a loss.   The other outcome is the call buyer takes your stock.   This would be good as you could bank a total return of nearly 12% in 60 days.   See the table below.



TheMoneyMadam

Disclosure:  Long FCX with calls

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Should you buy Freeport-McMoRan FCX for income?

With these credentials, it is hard to believe Freeport-McMoRan, symbol FCX, is not a Dividend Machine.

Earnings are $2.45 per year with a dividend payout of $1.25 for a yield of 3.49%.    Moreover, the dividend increases over the past 55 months average 23.6%.   FCX also carries a very manageable amount of debt; D/E (debt to equity ratio) is .9858.   The data are presented in the table below.

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Looking for money!

          Sometimes just waiting and seeing what is happening is the best move an income investor can make. You do not need to buy every day or even every week. I did finally get my Freeport McMoran trade at $45 and change and sold a $50 call but that is old news.

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Covered Call on FCX

          Yesterday and today I found my entry point for Freeport McMoran (FCX).  I posted last week that I would focus on FCX for income during this week. Earlier this week I could not find a call but yesterday and today with the perceived increased demand for copper from China, a call emerged.  Here is the math.


          Buy FCX                $41.90
          2/18/12 strike price $45.00
          Call income             $   .90

          Call income yield $.90/$41.90 = 2.149% yield
          Strike price yield if exercised (not including dividends) $4.00/$41.90 = 9.54% net gain

Have a great weekend.  Look for more income opportunities.  More ideas next week.

Very Truly Yours,
TheMoneyMadam

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Money and Metals

Money and Metals

                        No, this post is not about buying gold or selling silver, it is how to make income from dividends and covered calls on dividend paying stocks in the metals and mining sector.   Like you, I am evaluating how I did in 2011; looking for opportunities for more income and a company that I already own is going to be my focus this week. 

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Money machine Freeport McMoran symbol FCX

          Sometimes we find a company that just makes us so much money we cannot believe it.  IBM was such a company until it was finally taken as a covered call.  Freeport McMoran is a very different company than IBM but it has been a great money maker over the past seven months.

          I have written several posts on FCX.  On Friday I wrote another call on FCX.  Strike price is $60 and the call expires on November 11, 2011.  I received a premium of $2.10 per share.   I have written several calls on FCX for income.   My cost basis is $54.17.  In December a special dividend was paid; in May a regular dividend was paid; and in June another special dividend. 

         The point of this post is that the you need not depend only on dividend machines for income.  A little risk in a well researched stock can also provide very nice income.

          I have listed the links to each of the 6 posts on FCX.
http://www.themoneymadam.com/2010/12/high-risk-income-play-fcx.html
http://www.themoneymadam.com/2011/01/freeport-mcmoran-high-risk-trade.html
http://www.themoneymadam.com/2011/01/high-risk-trade-freeport-mcmoran-follow.html
http://www.themoneymadam.com/2011/03/freeport-mcmoran-high-risk-trade.html
http://www.themoneymadam.com/2011/04/fcx-freeport-mcmoran-income-machine.html

Very Truly Yours,
TheMoneyMadam

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FCX Freeport McMoran - income machine

          Well income investors, Freeport McMoran, symbol FCX has been the subject of several posts in this blog.  As I search for more income today, I find FCX an income machine again.

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Freeport McMoran a high risk trade revisited

Freeport McMoran, symbol FCX,  was the subject of an option trade

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Freeport McMoran FCX provides even more income.

FCX provided another chance for income today. To refresh your memory we bought FCX at $107.5 sold calls at $115 but the calls expired this weekend. This morning FCX is up and I wrote more calls, again at $115. Expiration is March 19, 2011 and my income from the call is $4.50 per share. As an income investor, you have to love this kind of trade.

Very Truly Yours,

TheMoneyMadam

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High Risk Trade Freeport McMoran a follow up

December 2, 2010 I profiled a trade in Freeport McMoran symbol FCX. We bought at $107.50 then sold a $115 call. We hoped our option buyer would take our stock today for a swift gain. Check out the original post on FCX.

This is follow up to see how we fared.

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Freeport McMoran a high risk trade January 21, 2011

January 24, 2011 profile.   FCX provided another chance for income today. To refresh your memory we bought FCX at $107.5 sold calls at $115 but the calls expired this weekend. This morning FCX is up and I wrote more calls, again at $115. Expiration is March 19, 2011 and my income from the call is $4.50 per share. As an income investor, you have to love this kind of trade.

Very Truly Yours,
TheMoneyMadam

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High Risk Income Play FCX

Freeport McMoran, symbol FCX, is a very volatile stock that has provided me and in the past my clients with a lot of income. Admittedly we got lucky and did not own it during 2009 when it did not pay a dividend. 

Currently FCX pays $1.20 per share which is a yield of 1.14%. Earnings are $8.18 and the debt to equity ratio D/E ratio is a mere .41. So on fundamentals, this company does not meet our criteria as a dividend machine but it does meet my criteria for call income. 

Today I bought FCX at a lofty price of $107.50. I then sold a call with a strike price of $115 which expires in January, 2011 and received $3.50 per share. This means someone thinks FCX which mines, smelts, and refines copper, gold and molybdenum will command a price greater than $115. 

My experience with FCX is that it goes up quick and down quick so I did not want to take a call very far out which is why I picked a January call instead of February which would have paid me $5.15. Note that for those of you who can handle more risk than I can, if you sold the February call you will also get the $.60 per share dividend in February. 


I want them to take my shares. FCX is not a dividend machine so it is okay with me that the buyer of this call takes my shares. These two trades provide an immediate $7.50 on the capital gain plus the call income of $3.50 for a total gain of $11.00 on an investment of $107.50 for a 10.23% gain in just 51 days. Hopefully, the value of hard assets will continue to be strong and I can put that money in the bank. 


Very Truly Yours,
TheMoneyMadam

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