As a refresher, this kind ofÂ tradeÂ 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 DeereÂ yesterdayÂ by selling one June 19, $92.50 covered callÂ for $1.92 per share. I sold this call on the 100 shares that I had purchased for $90.71 per shareÂ lastÂ year. Even though this new trade will not close until June 19, the income it generatedÂ yesterday secured my 10% annual yield.
In the left column I list the dividends I haveÂ collected for simply holding the stock. In the right column I list the options income I have collected from sellingÂ covered calls on my shares.
If all I had done was simplyÂ hold shares for the past year I would have generated a 2.6% yield (based on dividends alone).
But by selling just four covered callsÂ 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, ifÂ 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.
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