Trade: INTC


This week, I did a trade and covered call with Intel (INTC)

Due to interesting market conditions for this stock, my transaction was intended to be just a 

trade and not an investment, although I still own Intel (INTC) in another account. 


My article might be a bit more advanced than previous articles so I will try to articulate what I did as best I can.

Here's what I did and why I did it.

While looking over my laundry list of stocks on Sunday night, I noticed Intel (INTC) was going ex-dividend on Tuesday, November 6. This means you need to buy the stock the business day before or sooner in order to receive the dividend payout which is on December 1.

The dividend yield on INTC is a nifty 2.45% and paid a quarterly dividend of .30 per share. So, if you owned 1,000 shares of INTC by close of business on November 6th, you would get paid $300 just for owning the stock (.30 x 1000 = $300).

Meanwhile, I also noticed that the weekly $47.50 call option was selling for a whopping .65 per contract.

My plan was this. Buy INTC on Monday so I can collect the dividend. At the same time, sell covered calls on the INTC stock . This way, I will get 2 incomes.
1)The dividend of .30 per share and
2)The option premium of .65/contract.

If the stock got assigned this weekend because the price at the end of the week finished over $47.50, so be it. The income I collect is mind to keep. If the stock finished below $47.50 at the end of the week, the shares would remain in my account, the options would expire worthless, I would keep all the income, and then I could re-write more covered calls the following Monday.

Execution: On Monday, Bought 1000 INTC at $47.50 to collect the $300 in dividend income
Sold 10 Covered Calls at .65 per contract to collect $650 in option premium.
Total income on this one trade: $950

Aftermath: INTC ended up closing at $48.11 on Friday and my stock will be assigned because the closing price was over the $47.50 strike price on my options. When a covered call option gets assigned, the stock is automatically sold out of your account at the strike price. So, I bought INTC at $47.50 and INTC sold for $47.50.

While, I had 0 capital gain, I keep the $950.  Not too bad for a week's activity . On to the next trade!

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Disclosure: I am still long INTC in another account.

All I ask is that if you enjoyed this article, would you please share it with others. I enjoy meeting new people and more importantly, making new friends.

I wrote this article myself, and it expresses my own opinions. I am not receiving any compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Additional disclosure: My opinions and strategies of the are not intended to ever be a recommendation to buy or sell a security. The strategies I use have worked for me and it is 100% for you to decide if it could benefit your financial future. Please remember to do your own research and know your risk tolerance.


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