Small and large dividend stock and ETF investors can use covered calls and puts trades to generate monthly income from options premiums and options trading.
8.25.23. PAYC $285.33. Cost $330. Net debit ($330-2.30=$327.70. Sold PAYC 9.15.23 $300 covered calls for $2.65. Net debit ($327.70-2.65= $325.05). Delta .24, OTM probability 77.5%, IV 15.89%.
8.22.23. J.M. Smucker Co. (SJM) closed Tuesday at $139.67 a share. My cost was $151.18.
I sold SJM 9.15.23 (24 days to expiration) $150 strike covered calls for $0.45 a share, or $45 per call options contract. The return on risk is 0.30%, or 4.53% annualized. Add the 2.845% dividend on the $149.04 net debit price and the ARoR would be about 7.37% if I could replicate the trade 15 times in the next 12 months. This trade is in an IRA with other high yielding dividend stocks.
The delta is a low .12, which indicates that there is about a 12% probability that SJM will be called on Sept. 15. The probability that the stock will close below the strike price and out of the money is about 89.39%. I don't want SJM to be called so I traded for a lower risk of having called, and that lower risk comes with a lower RoR.
SJM's $1.06 per share went ex-dividend on 8.17.23. I'm in the stock for the dividend and covered calls premiums plus the possibility that it will rally back to the analysts' target prices. That may never happen, but if I can collect a lot of dividends and options premiums, I can get the net debit down to the stock's market price in a few years.
8.22.23. Newmont Mining Corp. (NEM) closed Tuesday at $38.60. It cost $43. I sold NEM 9.15.23 (24 days) $42.50 strike covered calls at $0.12 a share. The delta is .10. OTM is 91.49% and implied volatility (IV) is 30.9%.
The net debit is $42.21. The RoR is .28% or 4.24% annualized. Add the 3.791% annual dividend and the potential ARoR is 8.03% in an IRA. NEM went ex dividend on 8.14.22.
NEM is a 100% sell on Barchart.com. Its RSI is an almost over sold 30.58.
Analysts rate NEM a rather strong moderate buy with a 4.31 rating out of a possible 5.
Their high target price is $68. The mean target is $56.87, and the low target is $39, or about where the stock is trading.
I also sold NEM puts because I'd like to lower my average cost and net debit in this dividend stock.
8.22.23. Kraft Heinz Co. (KHC). Because KHC looks like a good dividend stock that has liquid puts and calls options, I bought KHC for $33.28 and sold KHC 9.15.23 (24 days) $34 strike covered calls for $0.17 a share.
Return on risk is about 0.51%, or 7.77% annualized. KHC's dividend goes ex-dividend on 8.31.23 at $0.40 per share. Add the 4.991% yield on the stock's $32.06 net debit and the options premium plus the dividend yield about 12.75% annually in an IRA.
If KHC is called at $34, the 1.69% gain on the trade would amount to an AROR of about 25% if I could get the same results on 15 similar trades during the next 12 months.
KHC is very over sold with a relative strength compared with the S&P 500 index of about 20.92. Any RSI under 30 is considered over sold while a 70 RSI is considered over bought.
Analysts give KHC a moderate buy, or 3.71 out of a possible 5 rating. Their highest target price is $48. The mean target is $41.92. The lowest target is $38, which is above the current price.
Comment deleted.
8.25.23. PAYC $285.33. Cost $330. Net debit ($330-2.30=$327.70. Sold PAYC 9.15.23 $300 covered calls for $2.65. Net debit ($327.70-2.65= $325.05). Delta .24, OTM probability 77.5%, IV 15.89%.
8.23.23 Strong NVDA earnings report should be good for stocks unless people sell on the news.
8.23.23. ISRG $291.32. Cost $305. Sold ISRG 9.15.23 (23 days) $305 calls for $2.45 a share.
ISRG was put to me last week at $305. Less the $1.50, the net debit is $303.50. After selling the calls, the net debit is $301.05.
The delta on the 23-day trade is .24, OTM is 77.4% and IV is 26.3%.
Analysts' rating is a moderate buy at 4.33 out of 5.
The high analyst's target price is $400, the mean is $364.94 and the lowest TP is $270.
On Barchart.com, ISRG is a weak 8% buy.
8.22.23. J.M. Smucker Co. (SJM) closed Tuesday at $139.67 a share. My cost was $151.18.
I sold SJM 9.15.23 (24 days to expiration) $150 strike covered calls for $0.45 a share, or $45 per call options contract. The return on risk is 0.30%, or 4.53% annualized. Add the 2.845% dividend on the $149.04 net debit price and the ARoR would be about 7.37% if I could replicate the trade 15 times in the next 12 months. This trade is in an IRA with other high yielding dividend stocks.
The delta is a low .12, which indicates that there is about a 12% probability that SJM will be called on Sept. 15. The probability that the stock will close below the strike price and out of the money is about 89.39%. I don't want SJM to be called so I traded for a lower risk of having called, and that lower risk comes with a lower RoR.
SJM's $1.06 per share went ex-dividend on 8.17.23. I'm in the stock for the dividend and covered calls premiums plus the possibility that it will rally back to the analysts' target prices. That may never happen, but if I can collect a lot of dividends and options premiums, I can get the net debit down to the stock's market price in a few years.
8.22.23. Newmont Mining Corp. (NEM) closed Tuesday at $38.60. It cost $43. I sold NEM 9.15.23 (24 days) $42.50 strike covered calls at $0.12 a share. The delta is .10. OTM is 91.49% and implied volatility (IV) is 30.9%.
The net debit is $42.21. The RoR is .28% or 4.24% annualized. Add the 3.791% annual dividend and the potential ARoR is 8.03% in an IRA. NEM went ex dividend on 8.14.22.
NEM is a 100% sell on Barchart.com. Its RSI is an almost over sold 30.58.
Analysts rate NEM a rather strong moderate buy with a 4.31 rating out of a possible 5.
Their high target price is $68. The mean target is $56.87, and the low target is $39, or about where the stock is trading.
I also sold NEM puts because I'd like to lower my average cost and net debit in this dividend stock.
8.22.23. Kraft Heinz Co. (KHC). Because KHC looks like a good dividend stock that has liquid puts and calls options, I bought KHC for $33.28 and sold KHC 9.15.23 (24 days) $34 strike covered calls for $0.17 a share.
Return on risk is about 0.51%, or 7.77% annualized. KHC's dividend goes ex-dividend on 8.31.23 at $0.40 per share. Add the 4.991% yield on the stock's $32.06 net debit and the options premium plus the dividend yield about 12.75% annually in an IRA.
If KHC is called at $34, the 1.69% gain on the trade would amount to an AROR of about 25% if I could get the same results on 15 similar trades during the next 12 months.
KHC is very over sold with a relative strength compared with the S&P 500 index of about 20.92. Any RSI under 30 is considered over sold while a 70 RSI is considered over bought.
Analysts give KHC a moderate buy, or 3.71 out of a possible 5 rating. Their highest target price is $48. The mean target is $41.92. The lowest target is $38, which is above the current price.