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SJM Covered Calls: The Game Goes On!

On 8/15, I picked up rights to Smucker’s quarterly dividend of 1.08 on my 400 shares. On 8/16, the calls that I had sold against my position last month expired below the strike so my shares did not get called way. On 8/19, I sold 4 contracts for 20 SEP calls with a 125 strike price for 1.94. So here’s where we are at this point.

Running totals on cash generated: $644 from 3/17 calls; $1,280 from 4/19 calls; $240 from 5/17 calls; $424 from 6/3 dividend; $560 from 8/16 calls; $432 from Q4 dividend (ex-div 8/16; payable 9/3); and, $776 from 8/19 calls. That’s $4,356 total since the game began on 3/6.

That’s an average of $871.20 per month. What if instead of an approximately $50,000 investment in the underlying asset–SJM shares–the investment were approximately $500,000? Then the average cash generated per month would have been $8,712. If that average held, the covered call game would generate $104,544 per annum. That’s something interesting to ponder.

Detailed game history can be found: here.

Keep on Keepin’ On,

P. Gustav Mueller, author of The Present