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On the buy write, if we earn next week’s dividend, and if WRK closes above $35 at expiration on September 15, you will be assigned and earn $1.7725 per share on $33.50 at risk, for a total return of 5.29%. Over a 42-day holding period, that would be an annualized return of 46%.
If we earn the $0.28 dividend at the end of this month, and if Corning closes above $34 at expiration on September 15, we would earn $1.28 per share on $33.00 per share at risk, or 3.88%. Over 44 days, that would be an annualized return of 32.2%.
If we earn the dividend, and if GSK closes above $36 at expiration on September, we will be assigned and compelled to sell our shares at $36. This would produce a total return of $1.16 per share on $35.20 per share at risk, or 3.3%.
If you took part in buy writes on home builder M.D.C. Holdings (MDC $48.75) and/or oil and gas exploration and production company Devon Energy (DVN $48.69), today looks like an opportune time to lock in profits.
If CTRA closes above $26.50 on August 4, we would earn $0.65 per share on $25.85 at risk, or 2.51%. Over a holding period of 17 days, that would be an annualized return of 54%.