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August Covered Calls Trades On Dividend Stocks Yield 12.2% In Options Premiums

Stock Picking, Options Trading for Income - Sun Jul 30, 2023

By Donald E. L. Johnson

Cautious Speculator

  • August covered calls trades on eight dividend stocks could yield 12.2% in options premiums annualized.
  • Potential gains if all of the calls are exercised would average about 31% annualized.
  • I expect to trade covered calls on three other dividend stocks soon.

The first eight covered calls trades on dividend stocks will yield about 12.23% annualized if they are not called when the call options expire on 8.18.23.

Click on images and zoom in for better views of the data.

If the stocks are called, they will gain an average of about 1.83%, or about 31% annualized. Last month three covered calls were exercised, which is what I’m hoping for on these trades. Annualization calculations assume that a covered call trade is replicated with the same or a different equity 12 to 17 times a year, depending on prices and the duration of each trade.

The average annual dividend yield on the eight stocks is 3.74%.

Five of the eight stocks have buy ratings of 56% of technical indicators to 100% for Cisco Systems Inc. (CSCO) . The other stocks with buy ratings are The Carlyle Group (CG) , Dow Inc. (DOW)  and Proctor & Gamble Co. (PG) .

CG and PG have the strongest buy ratings.

Stocks with sell ratings are Devon Energy Corp. (DVN) , J.M. Smucker Co. (SJM)  and Exxon Mobil Corp. (XOM) , which has a 100% sell rating. It reported disappointing second quarter results last week.

Most of these stocks have active puts and calls options trading volume.

This table shows the stocks’ support and resistance levels and their relative strength compared with the S&P 500 index.

In addition to these eight stocks, I’m expecting to sell covered calls on Merck & Co. (MRK)  and Pfizer (PFE) . Those trades will be reported in the comments section below.

I respond to comments on the comments section where readers’ comments are posted. That is, if you have a question about this article or other comments, I'll discuss it with you in the comments section below this article.

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On the date of publication, Donald E.L. Johnson had a position in: MRK, PFE, PG, CG, CSCO, DOW, DVN, SJM, XOM. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.