(09-26-2013, 07:06 AM)Kerim Wrote: Ok, I'll kick off this new options area by asking about how folks think about using covered calls with their dividend growth portfolios. I am intrigued by the strategy generally, but am just not sure how it is compatible with building a big portfolio, and a growing stream of income, over the years. Doesn't the specter of having your shares called away make it hard to build and track that portfolio?
While I will sell calls and puts, they are naked and outside of DGI portfolio in general.
My experience has been that the DGI stocks that we typically seek to own do not have enough volatility to make covered calls a viable strategy, except as an exit/entry to a position.
None of the DGI stocks in my portfolio currently pay enough, at the 95% OTM expiration strike, to make it worthwhile.
Even MO, I own PM, that has high implied volatility has a Jan14 call @95% OTM (strike price $40) that will pay 3 dollars per contract (100 shares, $3,700 in stock value).
Maybe mjs could give some examples?
Good luck to all.