Hey, my own private (almost) SI board. And the topic is appropriate since I'm now wondering if after coming into buy range where I was actively buying from 104 to $135 (many on exercised puts), if it might be time to sell some calls. Today the price is near $143 and the PE around 22. That's high for QCOM and both she and NXPI have gone up about 40% in the last few weeks. I did put an order in for QCOM 150's to be sold at $12 but we're a long ways from that one being accepted.
I look at INTC, AMD and NVDA and all have gone up to nosebleed elevation, so PE 22 does not look so dangerous, and EPS growth has been excellent for us when one modifies that extraordinary $12.53 adjusted in 2022 as Jim has shown me how it might be done fairly. I really don't like basing decisions on adjusted earnings but at least QCOM began doing that many years ago and so their reported earnings are consistent if not entirely accurate. Compensation in stock and all those investments in small startups are the two items I remember they adjusted. Probably a couple more I've forgotten. So PE 22 is somewhat overstated.
9/9/22 was when I made my worst recent purchase of shares on $160 puts sold for $22. A sale at $150 plus $12 premium in June- Sept, 2024 would give me a CAGR (return of just about 9% which is the lowest I've collected in all my years investing in QCOM, so I probably should aim a bit higher for at least 10% plus the 3% or so dividend I've been getting.==well actually more like 2% at the sale price. There may have been an incidental mistaken sale here or there which gained me less than 9%--oh, heck, now that I think about it more, there were quite a few but which were accompanied by more which gained well over 100%. And, of course, a few from the 90's which have a cost basis of $2.11 which are going to charities as my income allows it.
I've about convinced myself that $162 is too cheap to begin reducing my overweighted exposure to QCOM. I also must consider the fact that I might get to keep the $12 if the contract is not exercised. Nice 10% bonus for only the risk that our price rises that much on expiration date. Of course I could buy the call back if the price looked like it would stay above $150 until expiration, but that is usually expensive and I find that I often regret outguessing myself after so much effort in making the initial decision. And this would be the worst (lowest) sale of many which I hope to make in the next year, so my average would be much higher than that 11%.
So I'll leave that offer available subject to raising the price later if shares begin to trade up significantly or our February earnings report knocks everyone's socks off.
Best, Lance |
