I Just Made This “10% Trade” with Deere & Co. (DE)

A ‚Äú10% Trade‚ÄĚ can be a great way to generate double-digit annual yields from some of the best companies in the world.

As a refresher, this kind of trade involves selling either a covered call or a cash-secured put on shares of a high-quality dividend growth stock.

To show you how powerful this kind of trade can be, take a look at the illustration below.

It’s a real-life example of the income I have generated from making just four “10% Trades” over the past year with the same underlying stock, Deere & Co. (DE).

I made my most recent “10% Trade” with Deere¬†yesterday¬†by selling one June 19, $92.50 covered call¬†for $1.92 per share. I sold this call on the 100 shares that I had purchased for $90.71 per share¬†last¬†year. Even though this new trade will not close until June 19, the income it generated¬†yesterday secured my 10% annual yield.

In the left column I list the dividends I have collected for simply holding the stock. In the right column I list the options income I have collected from selling covered calls on my shares.

CaptureIf all I had done was simply hold shares for the past year I would have generated a 2.6% yield (based on dividends alone).

But by selling just four covered calls I have been able to boost my total income to $9.12 per share, which works out to a 10.1% yield.

That’s more than triple the yield I would have realized had I simply collected the dividend income.

With all of this in mind, if¬†you are the least bit interested in generating double-digit annual yields from some of the best companies in the world, I encourage you to consider making a “10% Trade” today. There are plenty of opportunities available right now.

Greg Patrick

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