Showing posts with label PSX. Show all posts
Showing posts with label PSX. Show all posts

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 Schwab.com and Marketxls

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Wednesday, March 9, 2022

Mulitple calls in the oil patch including a 2 day trade

Underlying Security Symbol:  CVX, PSX, VLO

 

I hate buying high and hoping the stock goes higher.  But today I am doing that because the catalyst is just too strong.  The catalyst in my opinion is the shortage of production capacity of oil.  This is not a supply chain issue.  This is a shortage of the end product.  I don't like buying high, but I am although I spread it out a bit. 

The best deal out there is still CVX

 

  • Dividend Yield 3.45%
  • Regular dividend increases
  • A May 20 call delivers $4.10 call premium income 


 

I filled a lot by buying 75 shares at $164.50.  

I sold the May $185 call for $4.10 and I should receive the dividend of $1.42 as the call expiration is after the expected ex-dividend date of May 15, 2022.

 

I wanted to spread out this chunk of money I am putting into energy so I selected PSX as the new name in my portfolio.  PSX is the second best deal out there for income investors.

 

  • Dividend Yield 4.66%
  • Recent dividend increase
  • A May 20 call delivers $2.70 call premium income 


 

I added 200 shares of PSX and sold a call against 100 shares.  My basis is $78.98.  The expected ex-dividend date is May 18, 2022 so I should be able to bank the $.92 dividend.

 

 

THE TWO DAY TRADE:

The third play I made today, trying to take advantage of weak oil prices, was to add VLO, Valero.  While VLO has a good dividend yield of 4.49%, they have not raised the dividend lately.  The best call I could find expired before the ex-dividend date so I would not be banking that dividend unless I still held the stock after the call expired.

However, I was compelled by a two day option.  I bought VLO at $87.32 and sold an $88.00 call for $1.20.  The call expires this Friday.  These little calls can help over time to fill my coffers.


 

 

 

 

 

 

 

 

 

Just a few interesting moves in an active market.

MM MoneyMadam

Data from Schwab.com and Marketxls 


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Monday, June 17, 2013

CALL OPTION INCOME Energy stock options for your retirement Income

PSX, CVX, and MRO  Three energy stocks with call option income.



The market moves up and down and so does your opportunity to make money on calls.  I have profiled three calls; see the tables below.    The point is to demonstrate that you need to understand how much you will gain by investing in a stock that pays a dividend and that has call option income potential.



Phillips Sixty Six, symbol PSX – August Call


PSX Call Option
Aug. $70
Strike Price
$70.00
Cost Basis
$64.06
Call Premium
$1.10
Dividend*
$0.31


Gain in $ if assigned
$7.04
Call Yield
1.57%
Gain Yield
10.06%
Total Gain Yield
10.50%
*Expected to pay in Sept.

  

PSX is an oil and gas refiner.   It used to be part of Conoco Phillips, symbol COP.  Now it is a separate company.   The table above illustrates your gain if you bought PSX today and sold an August $70 call.  If the call buyer takes your stock, your gain would be over ten percent.  If you are stuck with PSX, it could lose value but you will be paid a nearly two percent dividend while you wait for your next chance to sell a call or to sell the stock.







Chevron, symbol CVX – September call


CVX Call Option
Sept. $130
Strike Price
$130.00
Cost Basis
$121.00
Call Premium
$1.00
Dividend*
$1.00


Gain in $ if assigned
$10.00
Call Yield
0.77%
Gain Yield
7.69%
Total Gain Yield
8.46%
*Expected to pay in Aug.


CVX is the largest oil and gas company in the country.  It does it all, explore, refine and sell you retail gas.  It also pays over a three percent dividend.  If you bought CVX today and sold a September $130 call and the call buyer takes your stock, your gain will be about eight and one half percent.    Not as good as PSX, but if you are stuck with stock, your dividend income is better than CVX.








MRO Call Option
Oct. $38
Strike Price
$38.00
Cost Basis
$34.90
Call Premium
$1.00
Dividend*
$0.17


Gain in $ if assigned
$4.10
Call Yield
2.63%
Gain Yield
10.79%
Total Gain Yield
11.24%
*Expected to pay in Aug.

Marathon Oil, Symbol MRO – October Call


My third example is Marathon Oil.    MRO also used to own a refiner.  MRO spun off Marathon Petroleum (profiled on this blog in the past) and now MRO is a smaller company.  The table below shows you your return if you bought MRO today and sold an October $38 call.    




Like PSX, the dividend is just about two percent. Therefore, if you are stuck with this stock after the call option expires, you will get income but not as much as CVX.


If the call buyer takes your stock, your return will be over eleven percent.




Only you can decide which option is best for you.  These are three examples to help you understand how covered call income can boost the return on a dividend portfolio.



TheMoneyMadam
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