3 September, 2021 seen 28,295Selling covered calls I probably love even more than selling naked puts, unfortunately, there are not many good stocks…
On June 19, 2020, we bought an additional 11 shares of AT&T (T ) paying $30.02 per share. T is a stock we keep in our daughter's stock portfolio. With its quarterly dividend of 0.52 cents per share, this latest buy has a dividend yield of 6.79% and will pay us an additional $5.72 every quarter (before tax). Awesome!
T is paying a dividend in the following months: February, May, August and November
We like T for many reasons - it is the so-called dividend aristocrat stock, the company has raised its dividend for the last 35 years. The company is also paying out a reasonably good dividend (above 6%), last but not least T is a good stock to sell options on (puts and calls). Our goal is to collect 100 shares and start selling covered calls.
We made this buy as a penalty for a bad trade, let me explain - every time we close with a loss some options position, as a penalty we buy some good dividend stock. On June 19, 2020, I closed with loss a call ratio back spread on XLF ETF stock. For a penalty, it was agreed to buy T stock.
For the rest of the year, we are looking to take $9.72 (after tax) from this buy, which is about 0.27% from our $3,600 goal for 2020
We now are holding 21 shares of T, which contribute about $37.12 (after tax) yearly to our dividend income portfolio.
79 shares to go once we will be able to start selling covered calls and generate extra income. If we had 100 shares today, we could sell July 17, 2020, covered call (monthly options) with a strike price of $31, to get $0.55 premium.In case our shares would get called away on expiry we would realize $153 income in 28 days, that's a potential return of 5.09%