Verizon has announced their next ex-dividend of $.6525 on July 7th, 2023. With this information, I decided to establish a small Covered Calls position in Verizon by purchasing 400 VZ shares at $34.49 and simultaneously selling 4 June 16th, 2023 Calls at $1.89 per share at a buy/write net debit price of $32.60 per share. The corresponding potential time value profit was $.40 per share
[$1.89 Call options premium - ($34.49 stock purchase price - $33.00
strike price)].
I am hopeful that the Calls remain in-the-money (i.e. above the $33.00 strike price) on the options expiration date and that the maximum potential annualized-return-on-investment result of +29.4% shown below would therefore be achieved. But if the stock declines to below the strike price, then I would still be satisfied to continue with this Covered Calls position using my Dividend Capture Strategy (see a description of the strategy here) -- that is by selling 4 July 2023 Calls against the Verizon shares owned. The intervening ex-dividend of $.6525 on July 7th would provide a very generous 7.9% annual dividend yield at the current $33.00 strike price.
Some key numbers for this Verizon Communications Inc. Covered Calls position are:
Covered Calls Net Investment: $13,042.68
Profit if Assigned on Expiration Date: $157.32
Days Until June 16th, 2023 Options Expiration: 15
Absolute Return-on-Investment if Assigned at Expiration: +1.2%
Annualized Return-on-Investment if Assigned at Expiration: +29.4%
Jeff Partlow (The Covered Calls Advisor)
partlow@cox.net
