Excelon corporation (EXC) is a utility holding company that provides electricity to over 5 million customers in Pennsylvania and Illinois. It has the largest nuclear power plant holdings in the US at 11 plants which contribute to 80% of its energy output. It currently trades at 42.75 and has a dividend yield of 4.9%. Doing a buy-write combo on these conservative stock can increase the yield significantly while not increasing risk.
Buy 100 EXC @ 42.75: ($4,275)
Sell 1 Jan 12 45 call @ 1.30: $130
Sell 1 Jan 12 42.5 put @ 3.80: $380
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Total cash outlay: $3,765
Return: $210 dividends + $225 appreciation + $510 option premiums = $945 or 25% return on cash invested on a stock that needs to go up by 5% over the next 12 mos.
break-even: 40.075
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