winstonthink 10:11 am on Monday, August 3, 2020

EIX – Parking More Cash

BTO EIX stock @ $53.54
STO EIX Sep 18: 52.5 call @ $3.40

BTO EIX Jan 2022: 70 put : @ $21.76

EIX (Edison International) currently pays a $2.55 per share dividend (4.7% yield).

For the $70 protective put you are paying (53.54 + 21.76) – 70 = $5.30 premium. That first call sale goes a long way on the cost reduction process.

Thanks Sue (and many others) for all the ideas on conservative trades that can generate a reasonable income with upfront protection.

smasty 10:19 am on Monday, August 3, 2020

“Sleep at Night” is the perfect hashtag! I’m going to start using that. Nice twist you’ve taken to the concept.
fuzzballl 11:11 am on Monday, August 3, 2020

It looks like they are being much more proactive than PG&E was thank goodness!

https://laist.com/2019/03/18/socal_edison_tree_trimming_altadena.php
- winstonthink 11:19 am on Monday, August 3, 2020
  
  That long put is there for a reason(s). Trees, floods, fires – blame it all on SoCal Edison.
MikeL 11:32 am on Monday, August 3, 2020

I am curious what is your plan if the stock jumps to $60, for example.
While the covered call is safe, the DITM put can lose some money on the way up.
- winstonthink 12:31 pm on Monday, August 3, 2020
  
  Whatever happens, I bought stock for $53.54 I have the right to sell it to somebody at $70. I also know that if I hold the stock until Jan 2022 then I will receive 6 x $0.64 = $3.84 in dividends. In the meantime the stock can do whatever it wants to do. The Sep 52.5 call rolls to the Jan 2022 62.5 for even money. The stock on the way up meets the put premium on the way down – the first principle still holds.