A covered call trade is a very simple instrument to increase your monthly income. The basic idea is to sell a call option for every 100 shares of stock you own. By selling the call option, the investor receives a premium which is what our investors call monthly income or monthly dividend payments. We sell new call options each month to create new income – month after month. This is in addition to the current dividend paid by stocks on a quarterly basis.
Here is an example of what subscribers to the Get Rich Monthly Income Plan achieved in 2013:
Subscribers purchased Holly Frontier in January 2013 for $46.35 per share. So purchasing 100 share of stock will cost a total of $4,635 plus commission costs. At this time, HFC was paying a $0.30 per quarter dividend for a dividend yield of 2.59%. This is a nice yield on a fairly stable stock but it gets even better. In addition to the $1.20 in quarterly dividends, HFC paid $2.00 more per share in special dividends. This increases the total dividends to $3.20 per share in 2013. The addition of special dividends increases the stocks annual dividend yield to 6.9%. Wow, a 6.9% dividend yield is great in this low yielding stock market!
But it gets even better for Get Rich Monthly Income Plan subscribers. They sold a call option on each 100 shares of HFC stock they owned each month of 2013. Based on our results, this created a total of $1,985 for the entire year. This created an average monthly income of $165.42 by selling the call option which created the covered call trade. The total premium income of $1,985 is about 40% of the total cost of entering the trade – $4635 at the beginning of the year. Therefore, investors received nearly half of their initial investment in HFC back during the year through a simple monthly covered call trade.
Now, subscribers can add the three sources of income – quarterly dividend, special dividends and covered call income together to create a Monthly Income Plan. In total, subscribers received $2,305 in additional income from owning 100 shares of HFC stock in 2013. This is an average of $192 in additional income each month of 2013. And, the $2305 in income is 50% of the total amount of the initial investment in 100 share of HFC!