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.

This allocation is for income seekers and not traders.