Royal Dividends has reduced its position in VZ. How did it go?
The VZ position began on 2024-08-19, at which time 177 shares were purchased. We began writing covered calls immediately in order to leverage the size of the position to create extra income. The last such call option was for a strike of $43 and expired in the money on 2026-03-20.
Ultimately, I was prepared to let the 100 covering shares get called away for as little as $43.00, the best possible price at which to have one’s shares called away, since in the end one will have forfeited zero upside in exchange for the option premium received upfront.
Unfortunately, VZ skyrocketed since their quarterly earnings announcement on 2026-01-07 and closed at $49.98 on Friday. It turns out selling the call(s) meant losing more in upside than collected in premium: $213.13 – 100 x (49.98 – 43.00) = $(484.87).
But this doesn’t mean we’re unhappy. We were able to increase our effective dividend yield by 52 basis points, grab an equivalent amount in capital appreciation and see a total return of 21.1% or 12.8% annualized return.
Furthermore, there remain 77 shares that are fully partaking in this long-awaited market recognition of VZ’s value.
Incredibly, VZ has not participated in the market downturn brought on by the war in Iran.
May that remain so.