I opened a covered call trade on AbbVie (ABBV).
music selection: “Don’t Wanna Fall In Love” — Jane Child
AbbVie is a large cap pharmaceutical company. It gushes free cash flow and has a depressed price compared to similar companies due to fear that it will suffer when its blockbuster Humira drug goes off patent. Fear not, ABBV bought the maker of Botox in 2019, adding a lot of free cash flow. It also has a promising pipeline of new drugs that are expected to more than replace Humira sales. The P/E of around 14 makes this a value play.
I bought 100 shares at 107.75 and simultaneously sold a covered call at the 105 strike for 5.53 per share. The covered call returns 37.47% annualized. Being called would result in a 2.75 capital loss. Retaining shares means remaining eligible for 4.83% underlying dividend and to write more covered calls. I’m satisfied with either outcome.
Devour your prey raptors!