02-17-2014, 02:11 PM
"I am retired and the low yielders do not put enough cash in my pocket"
I agree with that sentiment. Buying a solid lower yield company on the dip, then selling calls about six months out usually gives a combined cash flow of 8%-10% for the period. Not too shabby if you don't mind what usually ends up being a transient holding. T is one of my current CC favorites. Buy the shares on a dip under $33., then sell six month out calls for $0.95-$1.10. The call income effectively doubles, or slightly more, the dividends such that the CC play kicks out about 6% for the period or 12% annualized. The small capital gain will pay for the trading costs.
I agree with that sentiment. Buying a solid lower yield company on the dip, then selling calls about six months out usually gives a combined cash flow of 8%-10% for the period. Not too shabby if you don't mind what usually ends up being a transient holding. T is one of my current CC favorites. Buy the shares on a dip under $33., then sell six month out calls for $0.95-$1.10. The call income effectively doubles, or slightly more, the dividends such that the CC play kicks out about 6% for the period or 12% annualized. The small capital gain will pay for the trading costs.
Alex