NET Dividend Type Payments
Although NET has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on Cloudflare, Inc. Class A to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Mon 4:16 PM ET):
| Cloudflare, Inc. Class A (NET) |
|---|
| Bid |
Ask |
Last |
Change |
Volume |
P/E |
Market Cap |
| 199.25 |
201.75 |
199.41 |
+0.99 |
3.5M |
- |
69B |
NET Dividend-Like Income Using Covered Calls
With NET at 199.41, here's a table showing how big the annual "dividend" (i.e. total annual call premium received) would need to be to attain 3%, 5%, and 10% annual yields. Also shown is the equivalent number of cents/day necessary to achieve each yield:
| Annual Yield |
Annual Premium |
Cents/Day |
| 3% |
5.98 |
1.6 |
| 5% |
9.97 |
2.7 |
| 10% |
19.94 |
5.5 |
So now we need to find out of the money covered calls that pay at least the prescribed cents/day amount of time premium. That will generate income and, because they are out of the money, leave room for some upside potential on the stock. Here are some examples:
| 3% Yield On NET Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Aug 1 |
202.50 |
10.80 |
5 |
216.0 |
0.75 (0.4%) |
| Sep 5 |
205.00 |
13.85 |
40 |
34.6 |
3.25 (1.6%) |
| 5% Yield On NET Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Aug 1 |
202.50 |
10.80 |
5 |
216.0 |
0.75 (0.4%) |
| Sep 5 |
205.00 |
13.85 |
40 |
34.6 |
3.25 (1.6%) |
| 10% Yield On NET Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Aug 1 |
202.50 |
10.80 |
5 |
216.0 |
0.75 (0.4%) |
| Sep 5 |
205.00 |
13.85 |
40 |
34.6 |
3.25 (1.6%) |
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