AGL Buy Write 14% cash flow

AGL.ASX is in our buy write basket. Buy at $20.00 and sell the $20.50 Nov call options for $0.60 and collect the $0.35 August dividend. $0.95 cash flow for 4 months or $2.85 annualised = 14% annualised cash low return.

Analysts are a little too bullish on the outlook for AGL but I think downside risks are minimal and we should see EPS grow by 5% and DPS of $0.70 in FY17 and $0.73 in FY18. NPAT FY17 of 905m and growing to FY18 of $950m.

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This allocation is for income seekers and not traders.

 

 

Author: Leon Hinde

Leon has been working in the financial services industry for 18 years in management and advisory roles. Leon has extensive experience in general advice and dealings involving securities and derivative financial products.

PS 146 Securities & Derivatives, ADA 1 & 2 accreditation, Responsible Manager Certificate. Leon is authorised to provide financial product advice and deal with respect to the following financial products:

· Deposit Products
· Securities
· Derivatives
· Interest in managed investment schemes; and
· Government debentures, bonds and stocks