Trade of the Year/Batman - We've been discussing it for months, I'd call that a benefit. You already know the top candidates and they are all good trades.
Speaking of candidates, VZ caught an upgrade today but no one has noticed T yet. VZ is trading at 14x earnings and pays a 4.14% dividend, T is trading at 19 times earnings and pays a 7.2% dividend.
15x on T would be $23 and you can sell the T 2027 $27 puts for $4 and then you would be paying net 15x earnings for T while putting 2 year's dividends in your pocket up front.
We could then buy the stock for $28.90 and sell the 2023 $25 calls for $4.90 to net in for $24 and, with the puts, our net is $20/23.50 (if assigned) with the call-away at $25 (up 25%) and the 7% dividends on top - so a nice use of sideline cash.
So we could do 500 shares for $14,450 and sell the 5 2023 $27 puts for $2,000 and sell 5 2023 $25 calls for $2,450 and that nets us in to 500 shares for net $10,000 - just $20 per share so getting called away at $25 is a $5 ($2,500) profit PLUS anticipated $2,080 in dividend over 2 years is $14,580 back on $10,000 is 45.8% on this very conservative trade.
Of course 45.8% wouldn't make it the Trade of the Year so we'd use a spread instead, probably 50 of the 2023 $27 ($3.75)/32 ($1.85) bull call spreads at net $1.90 ($9,500) against 20 of the short puts ($8,000) for net $1,500 on the $25,000 spread that's 40% in the money to start. No dividend but the upside at $32 is $23,500 (1,566%) and that's right in our Trade of the Year territory but I'm not sure VZ getting an upgrade is enough of a catalyst to make T a clear winner...
