Established Covered Calls in Verizon Communications Inc.

The stocks of all three major wireless providers (AT&T, Verizon, and TMobile) were down substantially at market open this morning on reports that Amazon might partner with Dish to offer wireless service to their Amazon Prime customers.  Before 10:00am this morning, CNBC reported that Amazon had confirmed to Reuters that they do not have plans to offer wireless to Amazon Prime customers "at this time".  

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