Seeking Alpha comment by Double Dividend Stock 1/14/2011: VZ Calls

http://seekingalpha.com/user/191203/comment/1407670

Reply to Double Dividend Stock article posted on 1/14/2011.

Your scenarios provide for no up-side. I wonder if in the long term you'd be better off with a more balanced approach.

Example: VZ at $35.46 (Friday's close).
Sell Jul2011 $39 covered call for $.52.
You collect 2 dividends ($.975) so your annualized income with option premium is 8.5%. Stock needs a 21% CAGR to reach $39 by 7/16/2011.
Total return if called is 14.2% (31% annualized).

Nice thing about VZ is that with dollar interval options you can chose your balance between income and upside.

John
No position in VZ
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Additional note:
Using VZ $38 you'd get a little more upside potential than income.
Using VZ $37 you'd get a little more income that upside potential.