Covered Call Trade Idea with Monthly Options - Generate $140/mo from O (Realty Income Corporation)

This is not a trade recommendation, this is a trade idea. I'm not a financial advisor, anything written here should be taken with a grain of salt. I take no responsibility If you will decide to invest

Here at, we like the idea of selling covered call options on "good" dividend stocks, preferably from the Dow Jones, SP 500 or Fortune 500 list. In today's article, we are going to talk about a stock, which is part from the SP500 index, and is featured in many dividend income-seeking investor portfolios. Meet - Realty Income Corporation (0)

Realty Income Corporation is a real estate investment trust that invests in free-standing, single-tenant commercial properties in the United States, Puerto Rico, and the United Kingdom that are subject to NNN Leases. The company is organized in Maryland with its headquarters in San Diego, California. The company is one of a few real estate investment trusts that pay dividends monthly, rather than quarterly and has registered a trademark for the phrase The Monthly Dividend Company


Generate monthly income selling covered calls on O stock

On June 24, 2020, you could buy 100 shares of O stock spending $60.02 per share or $6,002 and simultaneously sell out of the money July 17 expiry covered call at the strike price of $62.5 for about $1.4. That gets you $140 and makes about a 2.33% return in 23 days. About 36.95% annualized. Break-even: $58.62

O Options Chain
O Options Chain

here is what could happen next:

If O stock closes below $62.5 on July 17, you keep the premium and start over.

If the stock closes above $62.5, your stock gets called away, but you keep premium $1.4 + realize value gain $2.48 ($62.5-$60.02) from selling stock higher than you bought. Total $388 or about 6.46% potential income return in 23 days.

There are several options you could use not to get shares called away, like a roll-up or roll forward. Or you could sell the stock, and start over by writing cash-secured put to take this stock back.

Remember, you are selling one contract, 100 shares of O stock, make sure you have 100 shares to sell if called away.

The biggest risk  - involving in covered call strategy - the stock price could fall below our buy price and stay there for months/years. 

As O is a monthly dividend-paying stock, paying about $2.8 per share anually (4.66% yield), you could enjoy additional $23 income (before tax) every month, while holding this stock.

Here at we are investing 50% from our monthly income in good dividend stocks, now we are on the road to complete our first 100 shares of PBCT, once it done (we are looking at the end of July 2020), we are planing to acquire O in our dividend/options portfolio.

Trade safe