Showing posts with label QCOM. Show all posts
Showing posts with label QCOM. Show all posts

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

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Friday, April 1, 2022

Favorite call: Adding to QCOM and selling call

Underlying Security Symbol: QCOM

 

Qualcomm is not treating us well today but not everyone thinks it stinks.  The call buyers don't think it stinks as you will see.

Chinese order slow down and softening consumer sales made the big boys down grade this stock and the price has sunk to about $145.  

When I can invest $14,500 and receive a premium of $7.05, I call that good income investing.  QCOM has been good to me and if you read my most recent post it provided the most call premium income of all my stock during the first quarter of 2022.   Here we go in quarter 2, 2022.



 

 

 

 

 

 

 

 

 

 

 

Fundamentals remain good.  TTM Earnings are $8.73 per share.  Dividend payout is $2.72 which makes me comfortable.  If QCOM continues to sink, at least we're getting the dividend and I think it is safe.  Estimates for future earnings are in the $11.84 range and if they miss that QCOM may test it's 52 week low of $122.17.  Note the high of the year is  $193.53.   That is a lot space to work with.

 

MM MoneyMadam Data from Schwab.com 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 Schwab.com and Marketxls

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Monday, March 7, 2022

Defensive use of Call Option on QCOM

Underlying Security Symbol: QCOM

 

May I reinforce my investing philosophy, I am an income investor.  I see stocks as chunks of money that I expect to create the income I live on.   In 1991 when I earned my securities licenses, I thought of myself as a bond girl.  And it was a terrific long bull market in bonds.  And I sold into those gains.  I don't own many bonds because I can't live off such paltry interest rates and there is little room for capital gains.  

Therefore, I must use equities to create income and just living off of dividends is dicey as well.  Covered call income makes up the difference.  

Not only do I use covered calls to supplement my income, I also use covered calls defensively.  And today's trades are an example.

I have quite a bit of Qualcomm and I have made a lot of money from the calls and from the capital gains of shares that have been taken and from the dividends.  Qualcomm is weak today but still above my cost basis on a lot that I bought in January, 2021 at $151.60.

I had a $200 call with a March 18, 2022 expiration.  I received $2.81 for selling that call in January, 2022. The call is worthless because QCOM is trading at $153.07.  

It's okay with me if I lose these QCOM shares. I would be trimming my position and raising capital to use for another call.  This is the defensive part of the trade. Of course, no one is going to pay me $200 for a stock trading at $153.07.  I could just let the call expire in 12 days or I could work it for more income.

If I work it for more income, I wanted a call with a lot of income.  QCOM just might surge to $160. Not unreasonable to hope for my shares being bought from me at $160.  A call buyer is willing to pay about $3.35 for a March 18, 2022 $160 call.  Here is the simple yield on that trade.



 

 

 

 

 

Just on this call alone, I received more income than a whole year of QCOM dividends.

I don't want to add more shares to get that juicy call premium so I bought back the $200 call for 9 cents and then sold the $160 call for $3.35.  If QCOM continues to slide, I could be underwater but I do get paid a dividend of 1.78% while I wait for the market to come back and allow me to sell more QCOM calls. 

Here is the total picture 



 

 

 

 

 

 

 

 

 

The key to this defensive strategy is to keep the expiration date short.  In this case 12 days. 

MM  MoneyMadam

Data from Schwab.com and Marketxls

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Thursday, January 20, 2022

Buy to Close Sell to Open QCOM

Underlying Symbol:  QCOM

 
Qualcomm, symbol QCOM is an interesting stock.  If you followed this blog when my posts were more directed toward dividend stocks, you will see I have been in and out of QCOM many times.  I also wrote (sold) a lot of calls on QCOM.  

Currently, I own QCOM and one half of my position is on call.  A $180 call will expire this Friday, as in tomorrow.   Since QCOM's price today is around $172.50, the call is nearly worthless.  I bought it back for 25 cents.  My basis on this particular lot is $151.60 which I bought a little over a year ago January 6, 2021.  The call buyer paid me $4.29 for this call.  Nothing else was going on that day !!!!

With those shares available, I sold another call on them. I selected a March 18, 2022 $180 the same strike price as the call that I bought back.  The call buyer paid me $8.10.  So if I subtract the cost of buying back the call my net premium on this trade is $7.85.   Where are you going to find an income of 5.17% today.  It's hard to beat this strategy for creating income.

Now the icing on the cake.  If my shares are taken upon expiration or any time after March 2, the ex-dividend date, I get to also keep the quarterly dividend of $.68.   Add it all up and the yield is even more impressive.  

BUY TO CLOSE:











SELL TO OPEN:

Data Source Market XLS and Schwab.com























I sell a lot of calls on QCOM and I want to remind you, it is very important to keep track of which lot.  In this case, I am using the lot with the highest cost basis.

MM

Data:  Schwab.com and Marketxls




















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Monday, February 3, 2020

QCOM 11% gain in 33 days

QCOM has been off my radar recently due to their debt.  Qualcomm broke out a few months back when some lawsuits were settled and QCOM was able to pursue acquisitions.  Take a look at the fundamentals I use for my first screen of a stock and you will be see some good metrics, but also one point of concern.

QCOM Earnings Dividend
 Earnings > Dividend $3.62 $2.48
 Debt to Equity 3.25
 Dividend Yield 2.87%
 3 Yr. Rev. Growth 1.10%


Let's look at their debt with one measure which is D/E ratio knows as debt to equity ratio. This is the point of concern. Presented in the table below are their most recent four quarters of D/E ratio which shows QCOM managing the debt reasonably well.

DATE LONG TERM DEBT SHAREHOLDER'S EQUITY DEBT TO EQUITY RATIO
9/30/2019 $13.44B $4.91B 2.74
6/30/2019 $13.43B $5.46B 2.46
3/31/2019 $15.41B $3.87B 3.99
12/31/2018 $15.39B $3.62B 4.25



Another measure is to see if QCOM can continue to pay down that debt is cash flow; not just earnings but cash flow.   In the chart below you can see their most recent quarterly cash flow versus liabilities.   It appears they have adequate cash flow to pay their obligations but cash flow is volatile lately.   




With that caveat in mind, I am adding to QCOM today and selling this call.   I selected an expiration date after the next ex-dividend date of 3/4/2020.   I selected a strike price that will deliver a reasonable gain pretty quickly; in 33 days.   The table below presents the call as I executed today.

Stock Price on Open Call Expiration 
QCOM $86.34 3/6/2020
Cost Basis:   2/3/2020 $86.30
Strike Price: $94.00
Call Premium:  $1.25
Dividend  3/4/2020 $0.620
Call Yield on Basis 1.45%
Call + Dividend Yield on Basis 2.17%
$ Gain if Assigned $9.57
Max Return  if Assigned 11.09%


Take a look at how the call worked out today and then use the interactive call calculator to determine how the call return would look for the expiration, strike and premium you might use.


Enter Cost Basis:
Enter Strike Price:
Enter Call Premium:
Enter Dividend if ex-div before Option Expiration:
Call Yield
GAIN
Total Return Percent if Assigned
*Not all browers support the interactive tool.  You can always use the tool in the call options page.  http://www.themoneymadam.com/p/covered-call-calculator_01.html

Income investing is very challenging in this low interest rate environment.  Very hard for seniors. We have to go out on the risk curve meaning we need to be in equities to get any sort of income.  Right now we use dividend stocks and sell calls on those.

M* MoneyMadam
Disclosure:  Long QCOM with calls
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Thursday, August 23, 2018

2018 Call Portfolio Update

Updated 8/23/2018

Last Friday was call expiration for the August 17, 2018 options.  We sold a second call on Apple (AAPL) and it was called away early at $200.   We did quite nicely on AAPL having bought a $176.98.   Income from call premiums and dividends alone equaled $739 which is an over 4% yield in 8 months.   Add to that the capital gain of just over $2,300.

There will be more than one investor who will point out lost opportunity.  By simply holding AAPL the additional gain the call buyer experiences is another $1,600 dollars that I will not realize.

My argument is that I invest for income and you never know when this long term bull market will turn on you.  I have my money in the bank and that is good enough for me.

The table below lists trades made to date.  With the AAPL call being assigned, we have $20,000 to invest.   I have a few ideas and will post them when I execute the trades.

I am liking the 11.22% yield to date.   My internal hurdle is no less than 5%.   I don't intend to use my principle for living expenses.   Since I don't work, I need my investments to create no less than 5% to fund my family's lifestyle.


2018 COVERED CALLS

  Invested Capital    
Realized
Capital Gain
Div & Call Income
Yield on Invested Capital
 
  $68,222.00     $2,302.00 $5,352.00
11.22%
 
               
  SYMBOL Number of Contracts Expiration BASIS Bought Date SHARES INCOME  
               
               
  QCOM Bot $64.87 1/2/2018 100 Open  
  Contracts 1 Strike Premium Div Expired  
  Expiration 3/16/2018 $70.00 $1.25 2/27/2018               $125.00  
          $0.50 $50.00  
          5/27/2018    
          $0.50 $50.00  
    Added 100 Shs $54.00 4/4/2018 100    
  Contracts 2 Strike Premium Div Expired  
  Expiration 6/15/2018 $60.00 $1.31 5/29/2018               $262.00  
          $0.62 $124.00  
  Contracts 2 Strike Premium Div Open  
  Expiration 9/21/2018 $65.00 $1.21 8/27/2018               $242.00  
          $0.62 $124.00  
               
  NUE   $66.60 1/3/2018 400 OPEN  
  Contracts 4 Strike Premium Div Expired  
  Expiration 2/16/2018 $70.00 $1.35 After Expir. $540.00  
          $0.00    
  Contracts 4 Strike Premium Div Expired  
  Expiration 4/20/2018 $72.50 $1.05 3/28/2018    
          $0.38 $572.00  
  Contracts 4 Strike Premium Div Expired  
  Expiration 7/20/2018 $67.50 $1.00 6/28/2018    
          $0.38 $552.00  
  Contracts 4 Strike Premium Div OPEN  
  Expiration 10/19/2018 $75.00 $1.00 9/28/2018 $552.00  
          $0.38    
               
  RIOT   $21.08 1/11/2018 200 Expired  
  Contracts 2 Strike Premium Div    
  Expiration 2/16/2018 $22.00 $2.25 No Div               $450.00  
  Contracts 2     No Div Expired   
  Expiration 6/15/2018 $12.00 $1.00 $0.00 $200.00  
               
  AAPL   $176.98 1/22/2018 100 Assigned  
  Contracts 1 Strike Premium Div Expired  
  Expiration 4/20/2018 $195.00 $2.20 2/4/2018               $220.00  
          $0.63 $63.00  
  Contracts  1 Strike Premium Div Assigned Early 8/10/2018  
  Expiration 8/17/2018 $200.00 $3.10 5/11 & 8/10 2018 $310.00  
          $1.46 $146.00  
               
  TWTR   $25.91 2/5/2019 200 Assigned  
  Contracts 2 Strike Premium Div               $218.00  
  Expiration 2/9/2018 No Div  
      $27.00 $1.15 $0.00 $230.00  
               
  GILD   $79.99 3/8/2018 100 OPEN  
  Contracts 1 Strike Premium Div Expired  
  Expiration 5/18/2018 $87.50 $1.10 3/15/2018               $110.00  
          $0.57                 $57.00  
          6/14/2018    
          $0.57 $57.00  
  Contracts 1 Strike Premium Div Open  
  Expiration 9/21/2018 $80.00 $0.98 9/14/2018                 $98.00  
          $0.57    
               


Another important fact is total return.  Right now due to the rogue trade on RIOT and the weakness of NUE, we have a paper loss of about $1,600 or 2.39%.    If you are an income investor, you have to be immune to these paper losses.  I will not sell at a loss.  I will hold these securities and continue cash the dividends and sell calls until an individual holding is assigned.

Interesting experiment.

M*  MoneyMadam
Long all positions noted with calls as noted

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