Rate | votes | Share

This article was submitted by Robert Weinstein at Paid2Trade

AT&T Inc. (NYSE:T) together with its subsidiaries, provides telecommunication services to consumers, businesses, and other service providers worldwide. The company was founded in 1983 and is based in Dallas, Texas.

AT&T Inc. (NYSE:T)

Yield: 5.89%

Dividend Amount: $0.44

Ex-Dividend Date: January 06, 2012

Strategy:

In combination with my buying AT&T stock and after checking company updates, offer to sell the January $30.00 strike call for $0.27 over the intrinsic value. The option may get exercised early for a gain. In almost all cases I will sell the call option first to ensure the stock option leg is complete first. If not, after qualifying for the dividend, I will look to close out the covered option with a gain of about $0.07.

The current trailing twelve months (ttm) P/E ratio is 15.2. The forward P/E ratio is 13.3. The current book value per share is 19.17.

Investors have been rewarded with an increase of year-over-year revenue. Revenue reported was $124.28 billion for 2010 vs. $122.51 billion for 2009. The bottom line has rising earnings year-over-year of $19.86 billion for 2010 vs. $12.14 billion for 2009.The companys earnings before interest and taxes are falling with an EBIT year-over-year of $19.57 billion for 2010 vs. $21.00 billion for 2009.Rising revenue along with rising earnings is a very good sign and what we want to see with our companies. Be sure to check the margins to make sure that the bottom line is keeping up with the top line.

At $30.05, the price is currently above the 200 day moving average of 29.62, and above the 60 day moving average of 28.94.

The stock has moved higher in price 8.97% in the last month, with a change from a year ago of 2.29%.

The stock is performing similar when compared to the general stock market up to this point. When reviewed with the S&P 500, the year up to date positive change is 1.05%.

Remember, you must buy a stock at least three business days before the record date (at least one business day before the ex-dividend date) to qualify for a dividend.

My last step (completed before making a trade on the same day) is to check company announcements, and news sources for possible events that may cause the stock price to move. This is especially important during earnings season.

I research the different call options and calculate the expected probabilities based on Beta, Bid, Offer, Volume traded the current day, open interest, and time value / implied volatility. The Options offer some level of protection from down moves in the stock, and provide revenue to cover the times that the options do not fully cover down moves in the stock. Income is not needed from the option Premiums, so a break even from premiums received/stock losses ratio is a win.

I use a proprietary blend of technical analysis, financial crowd behavior, and fundamentals in my short-term trades, and while not totally the same in longer swing trades to investments, the concepts used are similar. Nothing in the article should be considered investment advise, but you may want to use this article as a starting point of your own research with your financial planner.