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Non-Tech : Income Investing
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To: robert b furman who wrote (43435)6/30/2020 9:48:03 AM
From: E_K_S2 Recommendations

Recommended By
shridog
tom2025

   of 52048
 
Re: Hi EKS,

There was concern w/ pipeline revenues that the CHK BK may/could disrupt their cash flows. Contracts may be redone/ KMI almost 18 months ago was moving to fixed fee type contracts rather than commodity priced.

In the option calculator there is a function in Street Smart Edge to calculate returns when writing covered calls showing total returns (w/ dividend) % Target ROI. Also there are on-line calculators that do the same thing.

The biggest component now is the dividend as the cost of capital is so low w/ 10 year Treasury rate @ 0.65%. My strategy is as follows (1) keep buying to bring avg cost lower, (2) look to write some covered calls to capture dividend across time and price but on only at most 1/3 of position. and (3) will provide some small downside hedge for portfolio.

Since in my top 10 positions I have high dividend yield payers; KMI, WMB, BGS, T & CTL plan is to look at total return on structuring some covered calls w/ dividend capture (at least 6 months out and maybe 1 year). That same option calculator on the Street Smart Edge provides you your downside protection percentage too.

Prices for KMI & WMB at the lower end, so maybe time to do a small add and run that calculation on $15 Calls and/or $17 Calls.

Looks like $15 Jan 2021 Calls provide 8.83% downside protection w/ Target ROI 9.61%. The key is Buy some low cost shares, then let stock run a bit higher (above the Call strike price then put on the covered call out at least 6 months and up to one year.

EKS
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