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Selling Covered Calls on High Dividend Paying Stocks

|Includes:Encore Energy Partners LP (ENP), FR

Searching the database stocks that pay high dividends with a view to selling covered calls to enhance the returns revealed some interesting prospects.

In order to come up with results in an effective manner we searched for Covered Calls with at least a 2% return and stocks with dividend yields of 6% or better with an expiration of 11/20.

The goal is find stocks we want to hold long term, with great yields and enhance that yield by selling Covered Calls.

The first Covered Call that came up on the list was (NYSE:FRO).  Frontline Ltd has a dividend yield of 10%, P/E of 13.65, and 3.48% out of the money (OTM) covered call with a ROI of 2% for 33 days.   The goal is for the call option to expire worthless and repeat the process again. 

The next Covered Call was for (NYSE:ENP). Encore Energy Partners has a dividend yield of 10% and P/E of 25.  For the purpose of a long time hold we view the P/E as too high and starting to reach a growth company verse and buy and hold value play.

The complete list is shown below. More choices can be found by including all expiration months.

Stocks: ENP, FR