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Strategies & Market Trends : Option Strategies -- Ignore unavailable to you. Want to Upgrade?

To: sm1th who wrote (2114)	6/27/2020 12:55:47 PM
From: robert b furman	2 Recommendations Recommended By pogbull scrooge Read Replies (1) \| Respond to of 2591

Hi sm1th, Last week I sold some KMI August 14's for 71 cents. If assigned my net purchase price will be $13.30. KMI pays $1.05 dividend with an end of year review to possibly boost the dividend to 1.25 - which it hoped to do last month , deferred to only a 5 cent rise vs. their hoped for 25 cent rise in the dividend. If assigned it would yield either $1.05/$13.30 = 7.89% or $1.25/$13.30 = 9.40% if raised at year end. The duration of the put is 2 months.The premium on an annualized rate would be .71/13.30 = 5.33834% / .167 (two months) = 31.97 %. I've accumulated a position in KM I over the years. There dividend is sustainable and natural gas is in greater demand as time goes on. Exports,and electrical generation displacing coal generation are ongoing trends that extend well into the future. KMI is a huge cash flow generater and they can fund their future cash flow plus dividend without seeking outside financing. Over the last few years they have lowered their debt and the CEO is the largest stockholder at almost 10 % of outstanding shares. I like that! I've been selling puts when ever KMI dips below 15 in the hope to get them assigned. It is one of the safe 7% yielders IMO. Bob