Covered Calls on Chevron (CVX)
Chevron (CVX) is a long-standing “forever hold” stock in my mind. Fossil fuels are intrinsic to human existence, and that simply won’t change.
CVX stock traditionally generates billions in free cash flow annually, it has $42 billion in cash and investments, and it is a premier name in energy.
CVX stock trades at $130.92. The July 25 $132 calls sell for $1.70. So you start by earning a 1.3% return on the call, or 15.6% annualized. If it gets called away, you pick up an additional $1.08 in capital gains, lifting your return to 2.1%, or 25% annualized. Expiration occurs before the company reports earnings, so you shouldn’t see too much volatility.