For the buy write, if Dow closes on October 20 above $52, you would earn $1.00 per share on $51.00 at risk for a total return of 1.96%. Over a very short 10-day holding period, that would be an annualized return of 71.5%.
If we earn the dividend on October 25, and if LEVI closes above $14 when these options expire on November 17, we would earn $0.82 per share on $13.30 per share at risk, or 6.17%. Over 38 days, that’s an annualized return of 59.2%.
If we earn the dividend on October 31, and if CALM closes above $45 on November 17, we would earn $2.46 per share on $42.55 at risk, or 5.78%. Over a 43-day period, that would be a 49.1% annualized return.
If we earn the dividend at the end of this month, and if NRG closes above $38 on November 17, we would earn $2.43 per share on $35.95 at risk, or 6.76%. Over a 45-day holding period, that would be a 54.8% annualized return.
In this article, we discuss what is a covered call and 10 best stocks to buy or covered calls. You can skip our detailed analysis of the covered call strategy and its performance over the years, and go directly to read 5 Best Stocks for Covered Calls. What is a Covered Call Strategy? A covered […]