Sold 2 Marvell Calls/MPW Dividend Reduced

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I own 200 shares of Marvell (MRVL) ant $63.48. As I write the stock is at $61.20. I just sold a 2 contract Call.

MRVL will announce earnings tomorrow and I feel it will be a beat. I normally don’t make moves on stocks that have news coming out, especially earnings, but I’m in the stock and the stock is below my but-in price. I’m gonna hold it through earnings so I decided to take in a small premium. Since I feel the stock will go up tomorrow as a result of their earnings report I sold a bit Out-of-the-Money. With the stock at $61.20 I sold the $69 Call. I don’t think the stock will go up to $69 but if it does and I get assigned I’m in the stock at $63.48 so I’ll make a nice profit. If they don’t beat the Street and the stock drops I’m in the stock anyway.

I sold 2 contracts of the 8/25/23 $69 Call for a premium of 70¢ which gave me a $140 premium.

Sell to Open 2 MRVL 8/23/23 $69.00 C @ 70¢ (+$140)  

 

With this $140 premium I bought 20 shares of one of Pimco Income Strategy (PFN) which is one of my high dividend holdings. I now own 320 shares of PFN which is  paying me a dividend of 12.2% annually. PFN pays their dividend monthly.

While I’m on dividend stocks let’s look at Medical Properties Trust (MPW). I own 1800 shares of this stock which has been paying me a 10% dividend. This week, to my disappointment MPW reduced its dividend from 29¢ quarterly to 15¢. This reduction was anticipated, however, still very disappointing. I will now receive a dividend of 5.5%. When investing in high dividend stocks getting a 50% reduction does not make me happy but many times with these types of stocks its expected. I will enjoy a 5.5% return until I figure out where I want to put this money, if I move it.

With my dividend I reinvest my dividends. The first move I made was to stop the reinvestment and I’ll take the dividend in cash. When it enters my account I will buy shares of my other high dividend stocks, The ones I’m holding right now are PFN and NeubergerBergman Next Generation Fund (NBXG). They are both paying me a 12.2% yield.

I do feel MPW will pop a little because it’s still paying a nice dividend at the price it’s at. As I write it’s up 20¢ and the stock is at $6.97. At this price the dividend is 8.6%. It’s still a great return. My return is a little lower because I’m in the stock at a higher price.

If you have any questions on my moves please send me an email.

 

Successful trading,

Steve

The Options Coach