Friday, December 20, 2019

CUK Carnival Cruises 64 day call

I added Carnival Cruises, symbol CUK, over a few weeks in September, 2019.  I sold quick calls on half the position a few weeks after initiating a position.   Today I sold calls on the rest.   The tables below show how this works.

  • Carnival Cruises pays a big dividend 4.23% and if the calls below are not assigned, it is worth it for income investors to hold CUK just for the dividend.
  • One risk is the cessation of dividend increases.  Between 2015 and 2018 dividends doubled but have not increased since February, 2018.
  • Call premiums are rich being equal to or greater than the quarterly dividend.
  • Call options are broad and provide opportunities to roll expiration dates every couple of months.
  • Dividend plus call premiums make CUK a good trade for income investors.

The first table is the original call I sold that expires today and will be assigned.  This call was a 30 day call.  The expiration date was after the ex-dividend so I have already cashed that check.  I will lose this lot but look below and you can see a similar call opportunity available today.

This second table is the call I sold today that expires in 64 days exactly on the day I expect CUK to be ex-dividend.  The calculations assume the dividend will be paid to me and that the stock will be assigned. In this table, I use my personal cost basis.

In the third table is the call I sold today based on opening a long position simultaneously.  So if you bought CUK and then immediately sold a call on your new position.  The cost basis is slightly different than my basis.  This call also mimics the original call I sold in November (see first table.)

The market is not cheap and to me I feel some frivolity.  People are buying stocks today and sometimes that means the options traders will pay a little more for a call option.  When you get paid the hefty dividend that CUK delivers while you wait for capital gains, it is worth investing in a stock.

M* MoneyMadam
Disclosure:  Long CUK with calls

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Tuesday, December 17, 2019

Quick 7% on CAT

Executed this quick call today.  Call expiration is 30 days away and falls on same date as CAT's ex-dividend date.  So let's see what happens.  I added shares and sold this call today.

Quick gain of about 7%.

M* MoneyMadam
Disclosure:  Long CAT with calls
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Thursday, December 5, 2019

XOM call activity today

Exxon Mobil

Bought this unloved energy stock and sold calls against it. Love the dividend: yield 5.08%, as I am an income investor, but don't love the price action.

Today's strategy will deliver additional income from the call premium.  If XOM is called away, I also will realize a capital gain.  If XOM is not called away, I will keep this lot in my portfolio provided the dividend is safe.  If the price action improves, I may be able to sell more calls for more income.

M* MoneyMadam
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Wednesday, December 4, 2019

Adding to LEG and selling calls

As I monitor call activity, I look for stocks that I already own.  Stocks that pay a good and increasing dividend.  Stocks that have a good history of EPS and Revenue growth.

Leggett and Platt, symbol LEG, is one of those stocks.  Let's first look at the recent fundamentals.


You can see clear evidence of revenue growth, EPS (earnings per share) growth, and dividend growth.   And in the next table you will see call option potential.

I have a significant position in LEG but I added today and am selling calls against that new position.  I picked a strike price that nudges up to the 52 week high of just over $55.00.   If they take it, I still have my original position.  If they don't take it, I get to pocket both the dividend and the call premium.

That is my strategy to retire with income that grows; and I am sticking with it.

M* MoneyMadam
Disclosure:  Long LEG with calls on part of the position
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Monday, December 2, 2019

Covered call activity on WMT

This call is strictly for short term cash generation.  WMT's high is $125.  I am buying today and selling this 47 day call to boost income plain and simple.   If I lose WMT, that is ok by me. If I keep it, I will cash the dividends and I will continue to sell calls.  You have to hurry if you want to capture the 12/5 dividend. 

M* MoneyMadam
Disclosure:  Long WMT with calls on some of the position
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Covered Call Activity MSFT

A call I executed today.   MSFT is a quality stock with a low yield.  I use covered calls to make up the difference between what MSFT yields and what I need.

M* MoneyMadam
Disclosure:  Long MSFT with covered calls
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