Suncor goes ex-dividend at $.545 (Canadian $s) -- which is about $.398 U.S. $s per share on November 30th, 2023 (a 4.8% annualized dividend yield at today's stock purchase price). This dividend is included in the potential return-on-investment results shown below. Suncor Energy Inc. operates as an integrated energy company in Canada and internationally. It operates through Oil Sands; Exploration and Production; and Refining and Marketing segments. This Covered Calls position uses my Dividend Capture Strategy, which is my preferred strategy for companies in low growth Sectors (such as this Suncor position which is in the Energy Sector). Also, as preferred, there is no earnings report prior to the options expiration date and analysts' current stock target price is $42.15 per share (+27.3% above today's purchase price).
As detailed below, two potential return-on-investment results for this Suncor Covered Calls position are: (a) +1.0% absolute return (equivalent to +40.1% annualized return for the next 9 days) if the stock is assigned early [i.e. on November 29th which is the last trading day prior to the Nov. 30th ex-dividend date]; OR (b) +2.2% absolute return (equivalent to +34.1% annualized return over the next 24 days) if the stock is assigned on the December 15th, 2023 options expiration date.
Suncor Energy Inc. (SU) -- New Covered Calls Position
The simultaneous buy/write transactions was as follows:
11/21/2023 Bought 500 shares of Suncor stock @ $33.10 per share
11/21/2023 Sold 5 Suncor December 15th, 2023 $32.00 Call options @ $1.42 per share
11/30/2023 Upcoming ex-dividend at $.398 per share
The overall performance results (including commissions) would be as follows:
Covered Calls Cost Basis: $15,843.35
= ($33.10 - $1.42) * 500 shares + $3.35 commission
Net Profit Components:
(a) Options Income: +$706.65
= ($1.42 * 500 shares) - $3.35 commission
(b) Dividend Income (If Suncor stock assigned on the November 30th ex-dividend date): $0.00
(b) Dividend Income (If Suncor stock assigned on the Dec. 15th options expiration date): +$199.00
= $.398 dividend per share x 500 shares
(c) Capital Appreciation (If Suncor stock assigned on the Nov 30th ex-dividend date): -$550.00
= ($32.00 - $33.10) * 500 shares
(c) Capital Appreciation (If Suncor stock is above $32.00 strike price and therefore assigned at the Dec. 15th expiration): -$550.00
= ($32.00 - $33.10) * 500 shares
1. Potential Net Profit (If Suncor shares assigned on 11/29/2023, the day prior to the Nov. 30th ex-dividend date): +$156.65
= (+$706.65 options income +$0.00 dividend income - $550.00 capital appreciation)
2. Potential Net Profit (If Suncor price is above $32.00 strike price at the Dec. 15th options expiration): +$355.65
= (+$706.65 options income +$199.00 dividend income - $550.00 capital appreciation)
1. Absolute Return-on-Investment (If Suncor shares assigned on 11/29/2023, the day prior to the 11/30/2023 ex-dividend date): +1.0%
= +$156.65/$15,843.35
Equivalent Annualized Return-on-Investment (If assigned early on day prior to ex-div date): +40.1%
= (+$156.65/$15,843.35) * (365/9 days)
2. Absolute Return-on-Investment (If Suncor price is above $32.00 strike price and therefore assigned at the Dec. 15th options expiration): +2.2%
= +$355.65/$15,843.35
Equivalent Annualized Return-on-Investment (If assigned on the 12/15/2023 options expiration date): +34.1%
= (+$355.65/$15,843.35) * (365/24 days)
At least eight of the nine metrics used in the Covered Calls Advisor's Dividend Capture Strategy spreadsheet (see below) must be 'YES' prior to establishing a new Covered Calls position using the Covered Calls Advisor's Dividend Capture strategy. As shown below, all nine criteria are achieved for this Suncor Energy Inc. Covered Calls position.
