While you are at it, you need to look up how that .80 dividend will/should be taxed. I'll give you a hint, it's not at the 15% dividend rate. Good Luck.
A very important difference, indeed. Calls very deep in the money often have little to no premium. There's that risk/reward thing again. The first in the money call has the fattest premium. Arnie
Using Deep ITM covered calls has no purpose as has been brought up unless using they have much premium in them (aka high IV or LEAPs). And as been brought up again, there are better ways to to do it. If one was to use CCs then ATM or OTM options would be best to do this as those options are mostly premium. BTW, Arnie I'd watch out for MO's dividend.
I don't know when the next time MO's dividend is, but when it comes around watch out for your short call as it's got a good chance to be early exercised. Especially if the cost of carry + same strike put price < dividend.
If you read my post, it went ex-div this Monday, the 13th. It didn't get called away, I still own it.
if it is in the money it will get called away. what are you referring to when you talk about hoping. that is not a strategy.
Just so I'm clear on this, here's my position. Bought 100 shares of ICO yesterday @ 22.95. Sold 1 contract of the Aug. 22.5 calls for a premium of 3.10.... Well, today ICO is trading @ 27.69 and the price of the 22.5 call is 6.00.. So...the way I figure it, I have 3 options... 1) do nothing @ expiration, & at which time my 100 shares will be exercised @ 22.5. This leave me with a 45 loss (22.95-22.50). But I will get to keep the 310 premium I received when I sold the calls... or 2) buy back the 22.5 calls and take a loss of 290 (6.00-3.10*100). ( this is assuming I bought back the calls today). But I get to keep the stock. or 3) buy back the calls @ expiration in which case I keep the stock but could suffer a loss on the call buy-back. Is this correct? This is my first covered call trade. Thanks.