DAO Dividend Type Payments
Although DAO has no upcoming (meaning, Board-approved and announced) dividends, you can sell covered calls on Youdao, Inc. American Depositary Shares, each representing one Class A O to create 12 extra dividend type payments per year to boost its yield. Let's look at some recent prices (last updated Wed 4:16 PM ET):
| Youdao, Inc. American Depositary Shares, each representing one Class A O (DAO) |
|---|
| Bid |
Ask |
Last |
Change |
Volume |
P/E |
Market Cap |
| 6.50 |
6.81 |
6.81 |
+0.01 |
53K |
112 |
0.0B |
DAO Dividend-Like Income Using Covered Calls
With DAO at 6.81, 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% |
0.20 |
0.1 |
| 5% |
0.34 |
0.1 |
| 10% |
0.68 |
0.2 |
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 DAO Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Aug 15 |
10.00 |
0.45 |
220 |
0.2 |
3.19 (46.8%) |
| May 16 |
7.50 |
1.00 |
129 |
0.8 |
0.69 (10.1%) |
| 5% Yield On DAO Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Aug 15 |
10.00 |
0.45 |
220 |
0.2 |
3.19 (46.8%) |
| May 16 |
7.50 |
1.00 |
129 |
0.8 |
0.69 (10.1%) |
| 10% Yield On DAO Using Covered Calls |
|---|
| Expiration |
Strike |
Call Bid |
Days |
Cents/Day |
Upside Potential |
| Aug 15 |
10.00 |
0.45 |
220 |
0.2 |
3.19 (46.8%) |
| May 16 |
7.50 |
1.00 |
129 |
0.8 |
0.69 (10.1%) |
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