Today, a Covered Calls position was established in Skyworks Solutions Inc. (ticker symbol SWKS) with a August 17th, 2018 expiration and at the $92.50 strike price. This position has an upcoming quarterly ex-dividend on August 6th of $.38 per share, so the potential return for this position, as detailed below, includes the possibility of early exercise because the ex-dividend is prior to the Aug 17th, 2018 options expiration date. Quarterly earnings were reported recently, so the next earnings report will not be until early November. Given the Covered Calls Advisor's current Overall Market Meter indicator of Slightly Bearish, a slightly in-the-money Covered Calls position was established.
As detailed below, a potential return-on-investment result is +1.6% absolute return (equivalent to +42.1% annualized
return for the next 14 days) if the stock is assigned early (business day
prior to Aug 6th ex-date); OR +2.0%
absolute return (equivalent to +28.5% annualized return over the next 26
days) if the stock is assigned on the August 17th options expiration date.
Skyworks Solutions Inc. (SWKS) -- New Covered Calls Position
The transactions were:
07/23/2018 Bought 200 Skyworks Solutions shares @ $95.37
07/23/2018 Sold 2 SWKS 08/17/2018 $92.50 Call options @ $4.37
Note: a simultaneous buy/write transaction was executed.
08/06/2018 Upcoming quarterly ex-dividend of $.38 per share
Two possible overall performance results (including commissions) for this Skyworks Solutions Covered Calls position are as follows:
Covered Calls Cost Basis: $18,204.95
= ($95.37 - $4.37) *200 + $4.95 commission
Net Profit Components:
(a) Options Income: +$872.66
= ($4.37*200 shares) - $1.34 commissions
(b) Dividend Income (If option exercised early on Aug 5th, the business day prior to Aug 6th ex-div date): +$0.00; or
(b) Dividend Income (If Skyworks Solutions assigned at Aug 17th, 2018 expiration): +$76.00
= ($.38 dividend per share x 200 shares)
outcome provides a good return-on-investment result for this
investment. These returns will be achieved as long as the stock is
above the $92.50 strike price at assignment. If the stock declines
below the strike price, the breakeven price of $90.62 ($95.37 -$4.37 -$.38)
provides 5.0% downside protection below today's purchase
The Covered Calls Advisor has established a set of eleven criteria to evaluate potential Covered Dalls using a dividend capture strategy. The minimum threshold desired to establish a position is that at least nine of these eleven criteria must be achieved. As shown in the table below, all of the eleven criteria are achieved for this Skyworks Solutions Covered Calls position.