Safe Yields for Income Investors

O

oldnemesis

Barron's cover is touting the recommendations of its Fixed Income Panel.
http://www.barrons.com/articles/safe-yields-of-up-to-5-barrons-fixed-income-panel-1470459663

ON-BT730_CovTab_11U_20160805205554.jpg



I always look at such lists to see if I can do better than buying the stock by using option spreads.

VOD
http://finance.yahoo.com/m/ade57df6-fb3a-3597-ba18-2fc125791fbe/ss_vodafone-gets-eu-nod-for.html

http://finance.yahoo.com/m/1537fbed-17db-37b8-adc1-c2da77385ed4/ss_vodafone-group-plc-:vod-us:.html

http://finance.yahoo.com/news/vodafone-says-germany-spain-italy-112531759.html

https://www.thestreet.com/story/136...steady.html?puc=yahoo&cm_ven=YAHOO&yptr=yahoo

http://finance.yahoo.com/quote/vod?ltr=1

http://stockcharts.com/h-sc/ui?s=vod

Trade:
With VOD at 31.12
Jan '17 25/20 bull put spread for a net credit of $20
Yield = 20/480 = 4.17% in 166 days or 9.0% annualized
VOD yields 4.97% annualized (The table above list yield at 6.58% but I can't verify that)
Prob = 94%
Expectation = .94(20) - .03(480) - .03(240) = 18.8 - 14.4 - 7.2 = 0

Price......... Profit / Loss.......... ROM %
15.00............ (480.00)............. -95.83%
17.50............ (480.00)............. -95.83%
20.00............ (480.00)............. -95.83%
24.42............ (38.50)............... -7.70%
24.80............... 0.00.................. 0.00%
25.00.............. 20.00................. 4.17%
30.00.............. 20.00................. 4.17%
35.00.............. 20.00................. 4.17%
40.00.............. 20.00................. 4.17%

Higher yield/lower risk trade than buying the stock
 
Last edited:
UL
http://finance.yahoo.com/news/unilever-un-q2-revenue-grows-110611658.html

http://finance.yahoo.com/m/1525ef9f-fb90-3303-9a32-c4e972077033/ss_unilever-profits-rise-2.html

http://www.forbes.com/sites/danielf...otix&partner=yahootix&yptr=yahoo#a08c23d732f3

http://www.msn.com/en-us/money/stockdetails/financials/fi-126.1.UL.NYS

http://finance.yahoo.com/chart/UL#eyJtdWx0aUNvbG9yTGluZSI6ZmFsc2UsImJvbGxpbmdlclVwcGVyQ29sb3IiOiIjZTIwMDgxIiwiYm9sbGluZ2VyTG93ZXJDb2xvciI6IiM5NTUyZmYiLCJtZmlMaW5lQ29sb3IiOiIjNDVlM2ZmIiwibWFjZERpdmVyZ2VuY2VDb2xvciI6IiNmZjdiMTIiLCJtYWNkTWFjZENvbG9yIjoiIzc4N2Q4MiIsIm1hY2RTaWduYWxDb2xvciI6IiMwMDAwMDAiLCJyc2lMaW5lQ29sb3IiOiIjZmZiNzAwIiwic3RvY2hLTGluZUNvbG9yIjoiI2ZmYjcwMCIsInN0b2NoRExpbmVDb2xvciI6IiM0NWUzZmYiLCJyYW5nZSI6IjJ5IiwiYWxsb3dDaGFydFN0YWNraW5nIjp0cnVlfQ==

Trade:
With UL at 46.17
Feb '17 40/37.5 bull put spread for a net credit of $25
Yield = 25/225 = 11.1% in 194 days or 20.9 annualized
UL yields 3.06% annualized
Prob = 86.8%
Expectation = .86(25) - .05(225) -.09(113) = 21.5 - 11.3 - 10.2 = 0

Price.......... Profit / Loss.......... ROM %
28.00............. (225.00).............. -88.90%
33.00............. (225.00).............. -88.90%
37.50............. (225.00).............. -88.90%
39.75.................. 0.00.................. 0.00%
39.78.................. 3.10.................. 1.24%
40.00................. 25.00................ 11.10%
45.00................. 25.00................ 11.10%
50.00................. 25.00................ 11.10%
55.00................. 25.00................ 11.10%
 
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