Showing posts with label Skyworks. Show all posts
Showing posts with label Skyworks. Show all posts

Wednesday, January 29, 2020

SWKS call potential

Friday, January 31, the final two calls from January expire. I make a living off of selling covered calls on mostly dividend stocks.  In January I had 33 calls on eighteen different stocks expire.

Those calls were sold as long ago as 87 days and recently as 2 weeks.

One of the two calls left is Skyworks, symbol SWKS a 1.5% dividend yielding stock.  My expiration is $119 and my basis on this lot is $110.80.  I received a premium of $1.90. SWKS closed at $117.80 today so I am in the money but below the strike price.  SWKS is volatile enough that I do not know what will happen on Friday.

How would selling a call on SWKS look today.  When it closed on 1/29/20 I looked at calls and here is what I found.  A strike price of $130 well above yesterday's basis; a call premium of $1.20 close to what I want and an expiration date after the next ex-dividend date.

Stock Price on Open Call Expiration 
SWKS $114.94 3/20/2020
Cost Basis:   1/29/2020 $117.89
Strike Price: $130.00
Call Premium:  $1.20
Dividend  2/10/2020 $0.440
Call Yield on Basis 1.02%
Call + Dividend Yield on Basis 1.39%
$ Gain if Assigned $13.75
Max Return  if Assigned 11.66%

In order to determine how to proceed today, I have included an interactive tool. You can enter your data and determine how your trade might work out.  I have put in the data that I used today to decide if I should add SWKS and sell another call.  You can enter your own data and determine if the trade is for you.

Enter Cost Basis:
Enter Strike Price:
Enter Call Premium:
Enter Dividend if ex-div before Option Expiration:
Call Yield
Total Return Percent if Assigned
This tool may not work with all browsers.  You can use the calculator that is  in my call options page.

The example below uses  closing price on both the common stock and on the option on 1/29/20.  Skyworks is ex-dividend 2/10/20 so I would select an expiration date after the ex-dividend date. I like to get at least 1% on my capital from the call premium when I am initiating a new position.  I want at least $1.20 in call premium income.

Strike price is of course important.  When I have an established position, I am more careful about making sure the strike price provides significant capital gains. But with a new position on a stock that is only yielding 1.47%, I can live with bagging only a 5% capital gain should this lot of SWKS be called away.

Every income investor who has to depend on their investments to create the major portion of their income stream should make an effort to learn how to sell covered calls.

I reinforce the need for research.  You want to sell calls on solid stocks that have enough of a catalyst to deliver growth and potential call income.

M* MoneyMadam
Disclosure:  Long SWKS with calls
Read more »

Friday, April 26, 2019

SWKS and NVDA taking advantage of chip weakness

My weakness is chips; potato chips.  I also like the chip space but I hate overpaying.  While Skyworks is not exactly a dividend machine because the yield is low, it has beta (volatility) which means I can take a chance with a covered call and if my new shares are not called away by the call buyer, I am getting paid nearly 2% to wait.  And this stock has no debt.

Take a look at a transaction I made today.  I added to SWKS and immediately sold this call.

Price on Open
Call Expiration


Cost Basis: 
Price on Option Contract Open

Strike Price:


Call Premium:


Ex Div Expected mid May

Call Yield on Basis


Call + Dividend Yield on Basis


$ Gain if Assigned


Max Return  if Assigned


I like a greater than 1% yield from the call premium and this call meets that hurdle.  Moreover, if my shares are called away, I get a total return of over 9% in a very short time period.

Now here is another call I sold today.   For the higher risk investor but in the same industry.

My kind of income investing.

M* MoneyMadam
Disclosure:  Long SWKS and NVDA  with calls
Read more »

Wednesday, April 17, 2019

Skyworks selling call on 5G innovation potential

(Graphic: Business Wire) 

Chip stock prices have improved lately and today some are really soaring based on Qualcomm news. I am not looking at Qualcomm, I am looking at Skyworks.   Although it is an "analog" chip company, you can learn more about its innovation and plan for working on the upcoming 5G networks, here:

I follow and write about SWKS often because it pays a dividend, and has a P/E price earnings ratio of 14.5 which makes it look like a bargain.  Qualcomm carries a P/E ratio of 36.56.   And, as my readers know, I love a stock that also has call option potential.   SWKS fits all the criteria.

SWKS Fundamentals:

Here are the fundamentals of SWKS.   You can review the dividend stock selection criteria I have used for my portfolios here:

SWKS Covered Cal:

I bought some more SWKS today but hedged my bet by selling a call with an expiration date that captures the dividend, I hope.  SWKS has not release the next ex-dividend.  Last year in May the ex-dividend date was May 25 which is after the monthly call expiration date of May 17.  However, in previous years the ex-dividend date in May has been earlier and you might consider a call with a May 17  expiration date rather than the May 31 expiration that I chose.

Be aware this stock can be volatile, but you do get paid to wait.   It could exceed the strike price before the expected ex-dividend date making your shares vulnerable to be called away.  You always get to keep your call premium.  If you are called away and only get the capital gain (difference between your basis and the call strike price or $8.20) plus your premium of $1.05, your gain falls to 10.07% below the 10.49% you would get should the shares be called away.

Most likely, however, you will keep your shares with a basis of $91.80.  Remember 90% of options expire without action.   With the full year's dividend of $1.52 and this call premium of $1.05, your income from SWKS for the next year would be 2.799% which is better than a short term treasury.   Of course with a short term treasury note or bond, you principal is safe.  Whereas, Skyworks' value could go down below your basis.

Since earnings and revenue growth are solid and Skyworks has no debt and Skyworks is in the thick of the next 5G generation,  I feel this is a risk worth taking.  Moreover, I may be able to sell more calls over the year boosting my income.

M* MoneyMadam

Disclosure:  Long SWKS with calls
Read more »