With the August options expiring this Friday, I recently reviewed the current portfolio and started to look for an opportunity to replace the (NYSE:LVS) position.
The previous chapter can been seen here as a review on how the portfolio was assembled.
LVS was added on July 5th and the Aug 52.50 calls were sold. With the present price of $56.52 , unless we experience a severe drop in price, the shares will be called away. If that does in fact take place we would have captured the 4.7% gain in a 6 week period.
I decided to add (NYSE:RIG) to the portfolio. ( I currently own as a LT holding, this purchase was in addition to those shares ) It currently has a 4.7% yield and we will capture a dividend payment in September by buying the shares today & selling the Nov call option . The trade breaks down as follows - BOT RIG @ $47.54 and sold the Nov 48 call @ 1.95.
The chart below shows the new addition, along with the expected gain of 7.4% if called and 5.2% if we still own the shares after Nov 16th.
If the shares are not called - I own a company yielding around 5% with a net cost of $45.59. In my view, there is very little risk associated with this position , no matter how the trade plays out.
Additional disclosure: Stocks4Income@usa.com