AMP Covered Call Dividend Play

by Gary Glover

AMP goes X-dividend on the 6th of September an amount of 15 cents (60% franked).  We believe the $4.85 is a key support level.   It marks the important 61.8% fibonacci retracement zone and it also marks the third attempt at the low, or as we have referred to on many occasions, a three thrust low pattern.  Fast moves generally precede these patterns so we think the stock can rally strongly from this point. 

Our strategy will be to buy the stock under $5.00 region and once it gets above the $5.25 region we will write a $5.25 September call option for approximately 15c.  If we're successful we should be able to generate 30c worth of income for the month of September which is approximately a yield of 6% for the month.  At these levels the risk reward ratio is compelling.

Disclaimer

Gary Glover is an Authorised Representative (Rep No. 259215) of Novus Capital Limited ("Novus"). Novus is a holder of Australian Financial Services Licence No 238 168. Novus, its directors, officers, associates and employees each declare that they, from time to time, may hold interests in financial products and/or earn brokerage, commission, fees or other benefits from financial products mentioned in this e-mail or attached documents. Unless specifically stated within this page or an attached document, any information communicated by this e-mail constitutes unsolicited general financial product advice which has been compiled without regard to any investor's individual objectives, financial situation or needs. It is not specific advice for any particular investor. Before making any decision about the information provided, you need to consider the appropriateness of this information having regard to your individual objectives, financial situation and needs and consult your adviser. Any indicative information and assumptions used here are summarised and also may change without notice to you, particularly if based on past performance or relate to a future matter.
 

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