Covered Call Basics

Posted on May 18th, 2011 admin No Comments

Covered Calls has been compared to being a landlord of your own stock portfolio in that you’re essentially leasing out shares of your stock.

I do like the landlord analogy. The premium you receive from selling a covered call is comparable to leasing income.

But with this strategy, comes an added twist – your tenant has the right to purchase the property outright from you at a predetermined price (i.e. the strike price of the call option you sold or wrote).

Here’s how it works: For each 1000 shares of stock you own, you would sell (or write) 1 out of the money call option. In exchange for the premium received, you in turn give the buyer of the option the right to purchase your 1000 shares at any time prior to and including expiration at the strike price of the call option.

Note: More conservative approaches involve writing the call at the money or even in the money.

The benefit of writing calls at lower strike prices is that you gain greater downside protection and likelihood of a profitable trade. The disadvantage is that you give up higher potential returns.

As long as the call option expires out of the money (i.e. the strike price is higher than the share price), your stock is safe and you can repeat the process again and again.

Even if the stock does close a little higher than the strike price, you can always roll out the position, buying back the current call and selling another one the next month out at the same strike price (or possibly at a slightly higher strike price), and collecting additional premium.

If the stock continues to rise, it will eventually no longer be cost effective to roll out the position. You can quickly find yourself having to roll it out a year or two in the future just trying to keep the position alive.

And that’s one of the biggest risks of the covered call strategy – the loss of potential large capital gains when the stock you own moves up in a big way.

The premium you receive is great when the stock is flat, and it even adds some downside protection if the stock begins to trend lower (you can calculate your stock position’s adjusted cost basis as your original purchase price less the option premium received).

But if the stock ever explodes higher, you’ll likely miss out on a huge payday.

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Five Criteria for Successful Call Writing Stock Selection

Posted on May 16th, 2011 admin No Comments

Although writing covered calls is a relatively simple and conservative option strategy, there are still a number of factors that contribute to how successful you’re going to be as a call writer.

One of those factors, of course, is stock selection. So how do you go about finding the best stocks for covered calls?

What follows are what I consider to be the five most important criteria for call writing stock selection:

Quality Companies

Choose high quality companies when looking for the best stocks for covered calls.

I admit that I’m a bit of a broken record about this one, especially when it comes to long term investing, but quality stock selection is also critical when it comes to trading covered calls.

It’s so easy to be tempted by juicy premiums on less than ideal companies, but if premium is the only criteria you consider, it won’t be long before you really get burned. Covered calls do provide some downside protection, but if the bottom drops out of a stock, you’re going to realize just how paltry that protection was.

True, when you sell calls for income, stock ownership is temporary and incidental. But even though you’re not a long term investor, ownership is still ownership. And in the short term, even temporary ownership of a mediocre company at just the wrong time, can lead to some serious pain.

The old adage of writing covered calls only on stocks you don’t mind owning has a lot of merit to it. If the underlying stock makes a significant move to the downside, you always have the choice of trying some form of rolling out as you wait for the stock to come back. All else being equal, the higher the quality of the company, the more credible that choice becomes.

Technical Analysis and Covered Calls

Technical analysis is probably as much art as it is science, but it’s still a critical tool in the search for the best stocks for covered calls. When considering a stock to write calls on, use your favourite stock charting software and consider various short, intermediate, and longer term time frames.

Are you able to see clearly identifiable areas of support and resistance? The easier the chart is to read, the more predictable the stock’s price movements are likely to be in the future.

In contrast, a stock is probably not suitable for covered call writing if the share price is erratic, or if it frequently violates major moving averages like the 50-day and the 200-day, or if support and resistance are either unclear or inconsistent.

Volatility, Premium, and the Best Stocks for Covered Calls

Related to the previous points about technical analysis, the best stocks for covered calls will have enough implied volatility to provide attractive premiums without being so volatile that the future share price is essentially unpredictable.

For long term investors in high quality companies, volatility is not risk. For traders (including call writers), volatility is both risk and opportunity.

But it’s a fine line. As a net option seller, you get paid to assume someone else’s risk. For covered call writer, the risk you assume is stock ownership on someone else’s behalf while they retain most, if not all, of the short term potential price appreciation

Just be sure that you don’t assume too much risk in order to reach your option income targets.

Liquidity

It’s important that the options market on any given stock you’re considering as a covered call candidate be sufficiently liquid.

If the options are too illiquid (i.e. very few contracts are traded), your trades will suffer. Not only will the bid-ask spread be too wide for good pricing (whether you’re selling a call or buying it back) but if you ever need to adjust or roll a position, the limited number of strike prices and expiration months available will really constrict your choices.

No or Minimum Dividends

Dividends don’t get mentioned much when it comes to covered call writing, except in discussions about whether a call might be exercised early. But you should be aware that dividends do play a role in call option pricing.

In theory, on the day a company pays a dividend, the stock should trade lower by the amount of the dividend because that money is no longer owned or controlled by the company.

For example, let’s say that the XYZ Zipper Company paid a $0.50/share dividend on June 1. All else being equal, on June 1st, the company’s overall worth should decrease by $0.50/share since that’s the amount that just walked out the door.

Obviously, it’s the supply and demand of buyers and sellers that ultimately determine the share price, but that dividend payout is still a short term headwind against the stock.

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The Covered Call Options Strategy

Posted on May 11th, 2011 admin No Comments

When the market is neutral to bullish on the underlying stock, the covered call is an options strategy that is used by investors. It is a classic strategy that is also called a Covered Buy Write or a Covered Call Writer.

This common strategy refers to a situation where the investor writes a call option contract and at the same time owns an equivalent number of shares of the underlying stock. It is when the underlying asset is bought at the same time as the call contract is written that the strategy is called the Covered Buy Write or “buy-write.”  When the investor already owns the stock and then buys call contracts then the strategy is called an “overwrite.”

Generate Monthly Income

This options strategy is used by many beginning investors because it is fairly simple. It is also a strategy used to generate additional income or a monthly income through the sale of call options against the stock. The intent is that the covered call provides some protection against a short term fall in the price of a stock.

The true income comes from the fact the investor is able to keep the premium generated from writing the call. The investor also owns the underlying stock and is still earning dividends. Of course, if the written call is exercised the shares will have to be sold.

The covered call is used when the stock price is expected to be stagnant but the investor still wants to make monthly income from the stock. The covered call is also a good options strategy when the stock price is expected to experience a small price dip.

Easy to Implement

The covered call is easy to implement. You would write 1 contract for out-of-the-money call options for the standard unit of 1000 shares of the underlying stock. There are 3 ways the order can be placed.

You can write the out-of-the money call option at the same time you buy the stock. Another option is to buy the stock after the contracts have been written and you expect the stock to rise a bit in the near future. In that case the stock is bought to hedge against the increase in the stock price.

The third option is to write the options contract on stock you already own. This protects the stock that you expect to fall a bit in price in the near future.

The profit that is earned at expiration if assigned is equal to the premium plus the difference between the stock purchase price and the strike price.  The profit that is earned if the expiration is not assigned is equal to the stock value increase plus the premium received.

The most profit that can be made is when is the price of the underlying stock is at least equal to or above the strike price of the call option. You can lose money if the price of the underlying shares falls as the written call options expire. You can lose the difference in the stock price between the price you bought it at and the price it falls to by the call’s expiration and you can lose the premium received when you sold the call.

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Options Trading: Writing Covered Calls

Posted on April 13th, 2011 admin No Comments

One of the reasons I like investing in dividend stocks is that I feel that they are inherently less risky than non-dividend paying stocks. Each time a dividend is received, a small gain on your invested capital is ‘locked in’. However, in volatile markets, price fluctuations can be significantly greater (in percentage terms) than any dividends received. To help combat drastic swings in valuation, and to augment the income received from dividends, I’ve adopted a strategy of writing covered calls on suitable long positions.

Writing Covered Calls:
Writing covered call options can be thought of as getting paid for writing a limit sell order. As with a limit-sell order, a sell price is specified when the options order is entered which limits the maximum achievable capital gain when the contract is in force. If this sell price is not met when the option expires, you keep the options premium received (free money!) and the stock. The difficulty in implementing a covered call writing strategy is determining a personally acceptable maximum potential rate of return over the duration of the contract in relation to the options premium received.

Prerequisites:
As each call option represents 1000 shares of the underlying security, a covered call writing strategy can only be adopted on long positions involving at least 1000 shares. In addition, your brokerage account must also be approved for options trading.

Determining an Appropriate Options Series:
Determining what options series to open is highly subjective and is based on a number of factors unique to each investor such as the commission required to write options, the desired annualized yield from options premiums, and the minimum annualized capital appreciation. To determine the options series that I write for each of my positions, I use the following guidelines:

1.) Expiry Month
The expiry month of the options series determines how long the options contract will be in force. As an options’ time value decreases as it approaches expiry, writing contracts with an expiry far in the future will increase the options premium received for each contract. However, as the time value of options decays more rapidly the closer you are to expiry, the annualized options yield (premiums received per year) can be greater by writing options with expiries in near months (up to three months out).

My rule of thumb for most stocks is that using an expiry date three months into the future tends to provide a balance in terms of capital appreciation potential, options premium received, and trading commissions.

2.) Strike Price
The strike price of the option series sets the maximum price that you can ‘sell’ the stock for as long as the options contract is in force. In choosing a strike price, I look at the worst-case total return (capital gains over the life of the contract plus options premium received less commission) of the stock over the two to three month period to expiry.

In general, I tend to write out-of-the-money options with strike prices that allow a total return (not including dividends) of between 5-6% over the length of the options contract.

3.) Options Premium
As compensation for limiting the potential for capital gains over the length of the options contract, I want to receive at least a 5% annualized options yield (net of commission) on each position I write covered calls on. Ideally this yield would be higher, but with small positions (writing 1-2 calls at a time) commissions significantly reduce the options yield.

After examining a stock’s call option chain, if I cannot identify an expiry month and strike price that will provide an the annualized options yield greater than 5%, and a worst case total return (less dividends) of greater than 7%, I will not write the contract. Instead, I will wait until a more volatile market (options pricing increases with market volatility) and then enter into the position. Otherwise I do not feel adequately compensated over the duration of the options contract for the potential of lower capital gains.

Performance of Options Strategies:
Writing covered calls on open long positions will generally under perform the market in strong uptrends, but outperform the market in downtrends, flat markets, and provide equivalent returns during modest uptrends. By underperforming during strong uptrends and outperforming in downtrends or flat markets, the overall year-to-year highs and lows in the portfolio will be closer together resulting in lower portfolio volatility.

Over a number of market cycles, the total long-term return of covered call writing should at least equal that of straight buy-and-hold investing. However, the income generated by a portfolio active in writing covered call will be significantly greater than that of the buy-and-hold investor. This can allow for more frequent reinvestment of dividends and options premiums which can help to increase the overall compound growth of a portfolio.

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Covered Call Options Trading – Covered Call Options Trading in a Bear Market

Posted on April 11th, 2011 admin No Comments

You would normally think of covered call options trading as something you would be inclined to do in a bull market. You look for a stock that is on the rise, or one that you expect to at least stay in a tight trading range in the short term, sell covered calls above the price you paid for the shares, collect call option premium and possibly also make a gain on sale of the shares if called away at expiry date.

This is a more aggressive approach and a great way to do covered call options trading when the market is generally bullish, or you have good reason to believe the stock you have chosen is going up.

But can you still consider covered call options trading when the market is in a primary downtrend? Yes you can! If your view of the stock is, that it is more likely to fall before expiry date, you can still make a profit. You take the conservative approach and this is how you do it.

If you’re doing a buy-write, first take note of the chart patterns and observe the highs and lows as the stock trends downwards. Try to purchase the stock as close as possible to the next “low” in the trend. This would usually be a support line, or a similar distance from the previous trough up to the peak before it.

So you have now bought the stock. Next thing to do is sell covered calls at a strike price that is UNDER the current market price of the underlying stock. These are called “in-the-money” call options. They will contain some “time value” but also some “intrinsic value” in the option premium. As a consequence, the premium you receive will be substantially higher than if you had sold out-of-the-money calls and will provide you with greater downside protection should the stock fall further.

You’re not in a hurry when you’re selling covered calls this way. You have until the near month expiry date to decide what to do next.

Let’s say that as expected, the stock rises in a short term pullback over the next week or so, before continuing the downtrend. At this point there is nothing to do. Your position is still in profit, even though it is smaller than if you had sold out-of-the-money calls. The higher the stock rises, the further in-the-money the sold call options will go. There will be more “intrinsic value” than “time value” now, as the delta increases.

If the stock reverses and unexpectedly continues north until expiry date, your shares will be called away at the lower strike price. You will make a loss on the shares but this will be neutralised by the higher call premium you received. Your profit should be only the amount of “time value” above the “intrinsic value” in the call options at the time you sold them.

But in a falling market the stock is likely to reverse after the pullback and continue south. If the stock falls rapidly, consider buying back the call options and selling more call options at a lower strike price to increase the yield. You will make a profit on the options you buy back because their value will have decreased and the delta will be working for you here. If you now sell more in-the-money call options at the lower strike, this premium will contain some time value, plus provide you with further downside protection for the shares you have purchased.

You can do this several times a month if your timing is right. You can also consider selling covered calls for the next month out as part of your strategy.

Here’s an example:

You have bought shares and sold in-the-money call options over them for a premium of $1.50 per share. In two weeks, the share price drops and the value of those call options is now only $0.25 per share. You buy them back and sell covered calls on the same stock at either a lower strike price or for the following month expiry, for around $1.50 again. You have made a profit of $1.25 on the first lot of sold calls, plus received another $1.50 on the second lot – a total of $2.75 per share which you can use to either protect against further falls or contribute toward your overall profit. Numbers like this would apply to lower value shares where the option premiums are not so high – you just increase the size as the share value increases.

But covered call options trading on stocks priced at less than $30 per share creates a higher percentage covered call option premium yield than on higher priced stocks. So this is a recommended part of your strategy.

Making a regular income from covered call options trading is just as possible in a falling market as it is in a rising one. It’s simply about adapting your strategy to current market conditions.

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Covered Calls Strategy

Posted on April 6th, 2011 admin No Comments

Among option-based strategies, the covered calls strategy is the easiest to grasp, the most popular, and the most conservative. It is also the one that most investors learn about first when starting to invest with options.

(1) you need 100 shares of stock or ETF, (2) you then sell 1 call option (because options control 100 shares in US but in Australia it’s 1000) against the stock/ETF you own, and then (3) at expiration you may end up having your stock called away (and receive cash) or you may end up owning your stock and having the call option expire worthless (in which case you can sell another call for the next cycle).

The option you, as the covered call seller, will sell is a “call option”. It has an expiration date and a strike price. You can choose both. For example, if you owned 100 shares of XYZ that was currently trading at $45/share, and if you would be happy selling that stock at $50/share next month then you would sell 1 call option with a strike of 50 that expires next month.

On expiration day if XYZ is less than 50 then you keep the stock and the money you got from selling the call. If XYZ is over 50 then you will lose your stock but you will receive $50/share of cash in its place (plus the money you got from selling the call in the beginning).

This is the part that gets most people excited. Let’s look at a real-world example. Right now, you can buy ATPG for $16.20. You need 100 shares, so that’s $1620. After that you can sell 1 Dec 15 call option for $1.88 (strike of 15, expiration date of Dec 18, 2010). You will receive $188 today.

At this point your break-even is 14.32 (16.20 – 1.88). If ATPG closes above your break-even point on Dec 17 (last day the Dec options trade before they expire on the 18th) then you’ve made money. That means the stock could drop $1.87 (11.5%) between now and Dec 17 and you would still make a profit. That’s what we mean by “stock could drop and you could still make a profit” — that’s why people like this strategy. If the stock drops 10% in 40 days you’ve still made a profit… because you sold an in the money call option.

If ATPG is above the strike price (15) on Dec 17 then you will receive $1500 for your 100 shares. Remember, at the start you paid 1620 but you received 188 so your net debit was $1432. So you made (1500 – 1432), or $68, on an investment of $1432. That’s 4.7% in 40 days, or 42.9% annualized. Nice!

The covered calls strategy is not get-rick-quick. But it can produce profits at regular intervals. You’ll want to have multiple positions in different sectors for diversification.

If you have a small account then consider ETFs since they have some built in diversification.

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Understanding the Basics of Covered Calls

Posted on April 4th, 2011 admin No Comments

Despite what the mainstream media would have you believe not every option trading technique is risky. Did you know that writing covered calls is often considered to be one of the safest, most conservative investment strategies available to the average investor? If you needed any further evidence of just how conservative this strategy is it should be noted that you can even sell covered calls within your individual retirement accounts. Perhaps the main reason why people have the erroneous belief that options are risky is simply because they do not understand the basic terminology involved.

When an investor decides that they want to start selling covered call there are just a few things they need to get started. The first thing they need to do is get permission to trade options from their Option broker. Most online platforms allow options trading by default so this typically involves reading a short pamphlet and then signing a form stating that you know what you are doing. After that, all you need is to own at least one hundred shares of the underlying stock for every call option that you want to sell.

Selling a call option essentially means that you are agreeing to sell a specific number of your shares of stock to another investor at a predetermined price. If the buyer exercises their rights to buy your stock you are then obligated to sell it to them at the strike price regardless of what the current market value of the stock is. This is perhaps the main reason you will always want to be in a covered position. In this instance, being covered simply means that you have a sufficient quantity of stock to sell the buyer without having to go into the stock market and buy it.

Of course, the seller would never agree to sell the rights to their stock if there was not something in it for them as well. Anytime an investor buys an option that must pay the seller a premium. This premium is based upon numerous factors such as how much time is left until the expiration date and how close the current market price of the underlying stock is to the strike price of the option. The premium income that the seller receives is what makes this technique so profitable.

Savvy investors know that most options that are held until the expiration date will expire with no value. As such, selling covered calls against stock positions that you already own is a very lucrative investment strategy when executed correctly.

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Butterfly Option Strategy

Posted on April 1st, 2011 admin No Comments

Butterfly option strategy is a neutral strategy. It is used when you think that the stock price will not move a lot, or trade in narrow range. The butterfly spread is a combination of a bull spread and a bear spread. The bull spread strategy is implemented by selling an in-the-money (ITM) put option and buying an out-of-the-money put option on the same stock with the same expiration date. While bear spread is implemented by selling an in-the-money call option and buying an out-of-the-money call option on the same stock with the same expiration date.

Both bull and bear spread are known credit spread where you will get income when you are using the strategy. You will get the profit by selling The amount received by selling higher strike option minus buying lower strike option.

Both bull spread and bear spread has limited profit and loss, hence the butterfly will also have limited profit, and limited risk.
Long Butterfly

There are two types of long butterfly, one constructed with call and one constructed with put.

When you are constructing with Call option only, it is called long call butterfly which consist of buying one in-the-money call with lower strike price, writing two at-the-money calls and buying a out-of-the-money call which has higher strike price.

The maximum profit of a long butterfly is calculated by subtracting the difference between the two middle and lower upper strike prices. The maximum risk is limited to the net debit paid when entering the position.

The long butterfly is a strategy that takes advantage of the time decay of an option contract with limited and known risk.

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Bought Strangles – Monitoring Trades

Posted on October 12th, 2010 admin No Comments

Once you have placed the trade it is important to monitor the progress of the trade. The main things to watch are the share price, strangle option value and the breakevens. If there share price increases quickly and the call option is at breakeven .

Do Nothing

Analyse the chart and workout the next resistance level. If your view on the share price is that it will continue to increase stay in the strangle. The risk here is that if the share price decreases the profits on the bought call with disappear.

Free Trade

If your outlook on the share price is that it will fall from the current levels. This may be indicated through bouncing off a resistance level or being overbought. You can sell the call option and receive all your initial investment or more and keep the bought put as a free trade. Whatever you close out the bought put will be additional profit.

Rolling the strangle

This is the preferred strategy. Rolling the strangle allows you to close out the profitable leg for breakeven or more. Buy a new strangle at the new levels and have a free put. This trade should be able to be done for a small credit so risk is not increased actually decreased from when the trade was placed. If the share price continues to decrease the call option will continue to profit. If the share price fall the trade will profit quickly as there are twice as many put options. This strategy works extremely well as you are always in the market and continually having free option legs. If there is an unexpected move this strategy will have a substantial profit.

To receive ASX Option Recommendations or to learn more about straddles and strangles please request the complete Straddles and Strangles eBook by contacting us on 1300 368 316 or info@totaloptions.com.au

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Recommendation: Suncorp-Metway (SUN) – Protected Long Synthetic

Posted on March 29th, 2010 admin No Comments

The following options trade on SUN take advantage a buy recommendation and a short-term price target of $10.50. The volatility is high after there on the SUN put options and low on the SUN calls meaning a protected long synthetic is a great strategy to take advantage of these volatility levels.

The options strategy has limited risk, and will make money as soon as the share price increases so the position can be closed out at any time for a profit once the share price increases. The trade has limited risk and unlimited return. The greater the share price increases, the higher the profit. Once the stock has moved there could be opportunities to sell short dated options against the position to further increase the return.

The call position expires in April, so there is time for the stock to increase. The trade involves buying a long dated call for June which expires in 6 months to take advantage of the share price increasing. To pay for this we are selling a bull put spread out until June to pay for the call option. The whole trade is actually done for an approximate 18 cent credit or $180.

The trade details are below as well as some more information on the reasons for entering this trade.

Trade:

* Buy 2 contracts April 2010 $8.33 Puts 26 cents

* Sell 2 contracts April 2010 $8.82 Puts 47 cents

* Buy 1 contracts April 2010 $9.31 Calls 24 cents

Net credit: 18 cents

Net credit: $180

Summary:

Maximum Profit: Unlimited

Profit if above $8.82 and below $9.31 = $180 or Return on Risk of 22.5%

Maximum Loss is below $8.33 = $800

Breakeven = $8.64

Primary Profit Target $10.50 = $1,600

Return on Risk = 200%

Secondary Profit Target $12.00 = $2,900

Return on Risk = 362.5%

Margin requirement: This trade is done for a credit of $180; however a margin is required for the bull put spread. The margin requirement will increase if the stock falls, and reduce if the stock increases. After the market increases the bull put spread if cheap enough will be closed out for a profit and then there would be no margin requirement. Allow approximately the maximum risk in dollars to cover the margin requirement or clients with share portfolios can use the shares as collateral. Initially the margin will not be that high, but it’s important to have it available if needed.

If you would like to place this trade please email me your account number and quantity of contracts to trade otherwise I can be contacted by email or on 1300 736 622 for more information.

Trade Summary:

* Fundamentals of SUN are strong after announcing an increase in First Half Net Profit of 41% this morning.

* Volatility is high on the put options and low on the call options so we are selling the high volatility and buying the low volatility to take advantage of this short-term volatility spike.

* A primary Profit Target exists at $10.50. This trade has unlimited return; however around the $10.50 level the trade would be up approximately $1,600 (100% return on risk + a higher return on the funds invested) for the above recommendation.

* A secondary Profit Target exists at $12.00. This trade has unlimited return; however around the $12.00 level the trade would be up approximately $2,900 (181.25% return on risk + a higher return on the funds invested) for the above recommendation.

* Notice on the chart below that SUN is still in a very strong uptrend.

* This trade has limited risk and unlimited return and provides leverages exposure to SUN break out above the recent highs of $9.40.

* The position can be closed out at any time once the share price has increased. This trade does not have a neutral trade and therefore does not need to be held until expiry to achieve maximum profit.

* On the monthly chart it shows a bull flag which is an explosive breakout pattern which would help SUN reach its targets in the short-term.

The Strategy – Protected Long Synthetic:

The Protected Long Synthetic is a strategy designed to have a leveraged exposure to a stock while only committing a small amount of capital. The strategy is designed to have a bullish view on a stock and to determine the maximum risk when entering and having unlimited potential return. This strategy is implemented when a stock looks set for a breakout or a strong share price increase. The bull put spread is entered for a credit and the funds received on this trade are used to buy call options. Buy selling the put options it reduces the negative time decay on the call options. The strategy also allows a profit to be made straight away and the trade can be closed out early with a profit and does not need to be held until expiry.

For more information on this strategy or to implement a Protected Long Synthetic Portfolio on a number of stocks please contact me to discuss in more detail.

Fundamental Analysis:

This morning Suncorp announced their First Half Results. The market has reacted negatively due to a reduction of the dividend from 20 cents last year to 15 cents. The net profit for the six months to Dec. 31 rose 41% on year to A$364 million from A$258 million a year earlier. So I believe the fall in Suncorp today is an overreaction and recommend buying the stock and the placing this trade.

The result was in the middle of its guidance range, issued earlier this month, for a net profit of A$355 million-A$375 million. The improved result reflected a strong contribution from the group’s general insurance operations, which benefited from favorable weather conditions and improved equity markets during the half. But its banking arm weighed down the result, recording a A$4 million profit for the half. Chief Executive Patrick Snowball, who took up the top role on Sept. 1, said in a statement that while the increased profit was pleasing, the group will maintain a cautious and conservative approach. Brisbane-based Suncorp declared an interim dividend of 15 cents a share, down from to 20 cents last year, which is slightly below its target payout ratio of 50%-60% of earnings.

Weekly Chart:

Monthly Chart:

Payoff Diagram:

To receive ASX Option Recommendations or to learn more about trading options please contact us on 1300 368 316 or info@totaloptions.com.au

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