Skyworks Solutions (SWKS) – Jason Fieber’s most recent pick in our ongoing Undervalued Dividend Growth Stock of the Week series that looks ~45% undervalued.
Shares of SWKS yield 2.6% right now, but by selling a covered call option we can create even higher income instantly — generating an annualized yield of 36.5% to 84.0% in the process.
Here’s how…
As we go to press, SWKS is selling for $95.65 per share and the October 28 $100 calls are going for about $3.35 per share.
Our income trade would involve buying 100 shares of SWKS and simultaneously selling one of those calls.
By selling a call option, we would be giving the buyer of the option the right, but not the obligation, to purchase our 100 shares at $100 per share (the “strike” price) anytime before October 28 (the contract “expiration” date).
