On the buy write, if IP closes above $37.50 at expiration on January 19, your calls would be assigned and shares sold at $37.50. This would produce a profit of $1.70 per share on $35.80 at risk, or 4.75%. Over 50 days, that would be an annualized return of 34.7%.
With today’s buy write, if AZZ closes above $50 on December 15, your calls would be assigned and you’d earn $1.30 per share on $48.70 per share at risk, or 2.67%. Over a holding period of 15 days, the annualized return would be 65%.
If you took part in the September 7 buy write on Consolidated Water (CWCO), your unrealized return is just above 6%. We have a similar situation with the Coterra Energy (CTRA) buy write that we did on the same day.
If we earn the dividend, and if KR closes above $44 at expiration on May 26, we would earn $1.69 per share on $42.60 per share at risk, or 3.97%. Over 31 days, that would be an annualized return of 46.7%.
Selling covered calls is another way to generate income from stocks and to produce positive returns in sluggish markets, and this is what we do four times a week in Forbes Premium Income Report. We only sell options on dividend-paying stocks.