On March 11, 2022, I bought 100 shares of NYSE: T stock paying $23.58 per share and simultaneously sold 1 covered call on them with a strike price of $24 and expiry next Friday. Credit received $21 (before commissions)
T&T Inc. is an American multinational conglomerate holding company that is Delaware-registered but headquartered at Whitacre Tower in Downtown Dallas, Texas. It is the world's largest telecommunications company and the largest provider of mobile telephone services in the U.S
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In the past, I have held T stock in my dividend stock portfolio and I really enjoyed this stock because of the higher than average dividend and call options.
I sold T at a low $30 and never looked back, but today I changed my mind and decided to add T back to both my dividend stock portfolio and keep selling covered calls.
here I made a quick video about my rationale behind investing with T stock
Anyhow I want to have more covered calls in my portfolio and T seems an ideal fit - till a great about 5% dividend yield, call options, and at the end of Q2, T shareholders are getting new shares from the Warner Media spinoff (about 1 share for every 4 T shares)
here is the trade setup:
BOT 100 T Stock 23.58 USD
SLD 1 T MAR 18 '22 24 Call Option 0.21 USD
I bought 100 shares at $23.58 apiece, in total paying $2,358 and sold 1 covered call with next Friday’s expiry, for what I received a premium of $21 (before commissions)
What happens next?
On the expiry date, March 18, 2022, NYSE: T is trading under $24 per share - options expire worthlessly and I keep premium - if T trades above $24 on the expiry date, my 100 shares will get called away and I realize my max profit $56 ($42+$14) or potential 2.37% income yield in 7 days.
Break-even price: $23.58-0.19= $23.39
I’m quite optimistic about this buy and looking to hold this stock at least for one year