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Non-Tech : Income Investing
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Recommended by:
maverick61
tom2025
To: robert b furman who wrote (43435)7/1/2020 8:32:50 AM
From: E_K_S2 Recommendations  Read Replies (1) of 52048
 
Re: Hi EKS,

Bought some more KMI at $14.61/share (in the AM when it sold off) and got some covered Calls sold at/near the close. Stock rallied on end of the quarter selling over 3%.

Plan is to sell covered calls on at least 30% of my KMI position. Today I got 15% covered calls sold at two different strike prices; $15 Calls and $16 Calls. These are the Dec 18 2020's which envelopes two div payments.

Stock rallied into the close and closed at $15.17/share. The Schwab Covered Call calculator provided these results:

Dec 18 2020 $15 Call:
Static ROI = 9.73% (assumes Calls are in the money and called)
Target ROI % = 9.73% (w/ 9.89% downside protection)
% Max Gain = 9.73%

Dec 18 2020 $16 Call:
Static ROI = 7.13%
Target ROI % = 6.36% (w/ 6.66% downside protection)
% Max Gain = 12.99%

Plan is to Buy more shares during next 6 months at/below $14.40/share to replace those w/ covered calls. Other option is to Buy back one or more of the covered Calls sold on any significant sell off, then sell again on any significant rally.

Will look at doing similar hedge on my other top 10 dividend payers including WMB, T, CTL and maybe BGS/ Will have to evaluate the Schwab covered call calculator, and price of the underlining security, current div yield and xdiv dates.

EKS
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