A couple of days ago in a taxable account I continued the following transaction:
02/09/2012 STO 2 PEP Mar 17 2012 62.5 Puts @.7 128.51
03/06/2012 BTC 2 PEP Mar 17 2012 62.5 Puts @.63 -137.48
03/06/2012 STO 2 PEP July 21 2012 60 Puts @1.58 314.36
With a drop in PEP price below 62.5, I rolled this position for a unique reason. I'm too busy right now with my business to monitor these trades and I'm going on vacation next week during option expiration and won't have good computer access. I rolled out and down for a net credit. If put to me my cost basis will be ~58.50/share and Pepsico is set for another dividend raise so the yield on cost will be a juicy 3.75% or so. In my opinion, that ain't gonna happen. If it does I feel great about this becoming a great enhanced income, double dividend candidate. In other words I'll start writing covered calls on the position collecting option premium and dividends. BTW for this trade we are using $2257.77 in margin maintenance. If they expire worthless we will earn $305.39 in 171 days which equates to 13.53% or 28.87% annual.
Showing posts with label enhanced income strategy. Show all posts
Showing posts with label enhanced income strategy. Show all posts
Thursday, March 8, 2012
Monday, February 6, 2012
Dividend Growth Portfolio Additions
Last week in my Dividend Growth Portfolio I made the following purchases: Century Link (CTL), Coca-Cola (KO) and Realty Income Corp. (O). Unlike many dividend growth investors I choose to reinvest the shares back into the stock that paid the dividend.
Century Link hasn't raised their dividend for over a year so they drop from the Dividend Achievers and Dividend Champions list. I'm not concerned, however, as they recently made some strategic acquisitions including the acquisition of Qwest. The dividend payout ratio is only 50% and the yield is ~7.75%. My money is on a return to dividend growth sometime in 2012 or 2013.
Coca-Cola needs no introduction. I might have bought in on the high end of price but it is due to raise it's dividend next quarter. I will look to add more on dips.
Realty Income is "The Monthly Dividend Company." I've been trading this stock for some time and love it as an enhanced income or double dividend candidate. I also love the monthly dividend and look forward to the compounding effect of that. I will likewise look to buy more on dips.
My Dividend Growth Portfolio is separate and distinct from my income trading accounts. These are my buy and hold retirement accounts. Like many dividend investors I am looking to increase my monthly passive income so that said passive income may fund my retirement years.
Century Link hasn't raised their dividend for over a year so they drop from the Dividend Achievers and Dividend Champions list. I'm not concerned, however, as they recently made some strategic acquisitions including the acquisition of Qwest. The dividend payout ratio is only 50% and the yield is ~7.75%. My money is on a return to dividend growth sometime in 2012 or 2013.
Coca-Cola needs no introduction. I might have bought in on the high end of price but it is due to raise it's dividend next quarter. I will look to add more on dips.
Realty Income is "The Monthly Dividend Company." I've been trading this stock for some time and love it as an enhanced income or double dividend candidate. I also love the monthly dividend and look forward to the compounding effect of that. I will likewise look to buy more on dips.
My Dividend Growth Portfolio is separate and distinct from my income trading accounts. These are my buy and hold retirement accounts. Like many dividend investors I am looking to increase my monthly passive income so that said passive income may fund my retirement years.
Thursday, February 2, 2012
New Trade: Century Link (CTL) Covered Calls
Today with CTL down over 2% I entered into the following trade in a traditional IRA:
02/02/2012 Bought 200 CTL @36.81 7371.71
02/02/2012 STO 2 CTL Feb 18 2012 37 Calls @.8 -148.47
This particular account is for a retiree family member. Century Link was a Dividend Achiever and a Dividend Champion before it froze it's dividend at .725/share. The yield is a whopping 7.73%. CTL goes ex-dividend February 16th and has an earnings report February 15th. I didn't shy away from buying before an earnings report because this is a stock we want to hold long term in this particular portfolio and this increased the income on the calls we wrote since we get paid for volatility.
Our out of pocket is $7223.24 or $36.11 per share. Assuming we don't get called away we will also receive the dividend of $145 which will lower our out of pocket to $7078.24 or $35.39/share. We can also write new calls in two and a half weeks to lower our out of pocket even more. If we do get called away (and don't roll the position) it is still a nice return. I like the setup on this one very much for an enhanced income strategy.
02/02/2012 Bought 200 CTL @36.81 7371.71
02/02/2012 STO 2 CTL Feb 18 2012 37 Calls @.8 -148.47
This particular account is for a retiree family member. Century Link was a Dividend Achiever and a Dividend Champion before it froze it's dividend at .725/share. The yield is a whopping 7.73%. CTL goes ex-dividend February 16th and has an earnings report February 15th. I didn't shy away from buying before an earnings report because this is a stock we want to hold long term in this particular portfolio and this increased the income on the calls we wrote since we get paid for volatility.
Our out of pocket is $7223.24 or $36.11 per share. Assuming we don't get called away we will also receive the dividend of $145 which will lower our out of pocket to $7078.24 or $35.39/share. We can also write new calls in two and a half weeks to lower our out of pocket even more. If we do get called away (and don't roll the position) it is still a nice return. I like the setup on this one very much for an enhanced income strategy.
Tuesday, January 24, 2012
Recent Trade Thoughts
I usually enter into new investments when the market is down and investors are fearful. For the last couple of weeks those times have been rare. I'm a patient person and I've learned to let the market come to me. There are some traders who I respect greatly, i.e., Bill Cara, who are bullish on the markets.
So why did I enter some trades when the market has been bullish? I didn't want to have the train leave the station with me standing on the platform. In any event, I only entered into some conservative out of the money put plays on stocks I would love to own. These were Coca-Cola, Proctor & Gamble and Johnson & Johnson. If put to me the yield on cost would be well above average. In addition, some of these are set to raise their dividends. I also entered into a covered call transaction on Conoco-Phillips. I like this one as they are going to spin off shares and are set to raise the dividend. It also diversifies us into oil and gas.
I've also been trading the precious metals which bottomed a couple of weeks ago. Now that they are back in their bullish trend I'm losing a bit of interest going forward. I'm looking for dips preferably large ones where folks are talking about precious metals cratering.
I think that GOOG may be providing a good opportunity for out of the money put writing, especially 30 or 40 points below where it's trading right now. I probably won't participate, however, as it violates my rule of only trading something I really want to own.
Other than these trades I think it's time to wait for a correction. Obvious opportunities should appear. I've got a ton of cash and margin to work with. With my recent trades I just took a little nibble in case we are off to new highs.
So why did I enter some trades when the market has been bullish? I didn't want to have the train leave the station with me standing on the platform. In any event, I only entered into some conservative out of the money put plays on stocks I would love to own. These were Coca-Cola, Proctor & Gamble and Johnson & Johnson. If put to me the yield on cost would be well above average. In addition, some of these are set to raise their dividends. I also entered into a covered call transaction on Conoco-Phillips. I like this one as they are going to spin off shares and are set to raise the dividend. It also diversifies us into oil and gas.
I've also been trading the precious metals which bottomed a couple of weeks ago. Now that they are back in their bullish trend I'm losing a bit of interest going forward. I'm looking for dips preferably large ones where folks are talking about precious metals cratering.
I think that GOOG may be providing a good opportunity for out of the money put writing, especially 30 or 40 points below where it's trading right now. I probably won't participate, however, as it violates my rule of only trading something I really want to own.
Other than these trades I think it's time to wait for a correction. Obvious opportunities should appear. I've got a ton of cash and margin to work with. With my recent trades I just took a little nibble in case we are off to new highs.
Monday, January 23, 2012
New Trade: Proctor and Gamble (PG) Naked Puts
Today in a taxable account with PG down below 65 due to some analyst downgrades I entered into the following transaction:
01/23/2012 STO 4 PG Mar 17 2012 60 Puts @ .29 153.36
Proctor & Gamble doesn't really need much of an introduction. It is a Dividend Champion, Dividend Aristocrat, blue chip, widow and orphan holding. It will be raising it's dividend next time around. If these get put to us our yield on cost would be over 3.5%, before the dividend increase. PG has shown great support at the 60 level. If the price sinks we have the option of taking the shares, writing covered calls and collecting dividends or rolling the position. We like both of these alternatives. If these puts expire worthless we will earn 3.64% in 54 days on a margin maintenance requirement of $4209.60. This includes commission costs and equates to 24.6% annual.
01/23/2012 STO 4 PG Mar 17 2012 60 Puts @ .29 153.36
Proctor & Gamble doesn't really need much of an introduction. It is a Dividend Champion, Dividend Aristocrat, blue chip, widow and orphan holding. It will be raising it's dividend next time around. If these get put to us our yield on cost would be over 3.5%, before the dividend increase. PG has shown great support at the 60 level. If the price sinks we have the option of taking the shares, writing covered calls and collecting dividends or rolling the position. We like both of these alternatives. If these puts expire worthless we will earn 3.64% in 54 days on a margin maintenance requirement of $4209.60. This includes commission costs and equates to 24.6% annual.
Profitable Trade: Intel (INTC) Covered Calls
In a traditional IRA we were assigned our Intel covered calls. This trade went down as follows:
11/02/2011 Bought 200 INTC @ 23.8875 -4,787.49
11/02/2011 Bought 200 INTC @ 23.8875 -4,787.49
11/02/2011 STO 2 INTC Nov 19 2011 24.0
Call @ 0.42 72.47
11/14/2011 BTC 2 INTC Nov 19 2011 24 Calls @ .89 -189.52
11/14/2011 STO 2 INTC Jan 21 2012 24 Calls @ 1.70 +328.47
12/01/2011 Dividend +42.00
01/21/2012 Sold 200 INTC @ 24 +4779.91
In this trade we made $245.84 in 81 days on an average of ~$4600 invested. This equates to a return of 5.3% or 23.88% annual. As always we include our commissions paid in the calculations. We allowed ourselves to get assigned because we didn't see any attractive opportunities to roll for a credit. I only roll options for a credit, no exceptions. We really like INTC and will probably write out of the money covered puts in this account to buy it back at a price of our choosing. Of course we will be paid for our efforts.
11/14/2011 BTC 2 INTC Nov 19 2011 24 Calls @ .89 -189.52
11/14/2011 STO 2 INTC Jan 21 2012 24 Calls @ 1.70 +328.47
12/01/2011 Dividend +42.00
01/21/2012 Sold 200 INTC @ 24 +4779.91
In this trade we made $245.84 in 81 days on an average of ~$4600 invested. This equates to a return of 5.3% or 23.88% annual. As always we include our commissions paid in the calculations. We allowed ourselves to get assigned because we didn't see any attractive opportunities to roll for a credit. I only roll options for a credit, no exceptions. We really like INTC and will probably write out of the money covered puts in this account to buy it back at a price of our choosing. Of course we will be paid for our efforts.
Wednesday, January 4, 2012
Patiently Waiting for Fear
With the market gains lately we've closed out several positions and taken profits. We have much powder in the keg. Years of experience through trial and error has taught me to not enter into positions too early. Don't trade for the sake of trading. How many times did I want to kick myself for not waiting until the inevitable swing down? Moving in cycles the market will inevitably hit a point where stocks one follows sink to OMG levels. If one is patient they can shoot fish in a barrel.
I'm having to be patient. Recently the sell off in precious metals provided an opportunity. They are back on the rise and when I've drained the lion's share of the profits from these trades I will close them out.
Where is the next opportunity going to come from? Not knowing is part of the fun. Is it possible for the market to keep lifting without a downturn? Probably not. In any event, successful trades are the name of the game. Don't lose money. Swing at the fat pitch. Be greedy when others are fearful and fearful when others are greedy. ~ Warren Buffett
Like Buffett we sit on cash and wait for opportunities :)
I'm having to be patient. Recently the sell off in precious metals provided an opportunity. They are back on the rise and when I've drained the lion's share of the profits from these trades I will close them out.
Where is the next opportunity going to come from? Not knowing is part of the fun. Is it possible for the market to keep lifting without a downturn? Probably not. In any event, successful trades are the name of the game. Don't lose money. Swing at the fat pitch. Be greedy when others are fearful and fearful when others are greedy. ~ Warren Buffett
Like Buffett we sit on cash and wait for opportunities :)
Monday, January 2, 2012
Dogs of the Dow look very tradeable for 2012
The 2012 Dogs of the Dow look like strong candidates for enhanced income strategies. They are these stocks. When one combines their yields with covered calls or out of the money put selling the returns can easily be double digit %'s for the year. With the volatility in the market we would recommend writing in the money or at the money covered calls and out of the money put writing. One should be aware of the ex-dividend date as well as when earnings are to be reported. Try to enter positions that capture the dividend and consider avoiding entering new positions before earnings are released or you may experience a gap down.
Friday, December 30, 2011
Precious Metals and other thoughts
Well it looks like precious metals bottom was yesterday morning. The GDX, GLD and SLV are all on the rise this morning. I assume that fear of a metals crash shook the herd out yesterday. In the face of this crash we were entering positions. With the MF Global situation and the weakness in the Euro it took more resolve than usual to go against the herd.
I understand and appreciate the simplicity and lack of stress that the dividend growth investor exists in! That being said, I believe I've learned methods that enhance the returns of the dividend growth strategy and which offer greater downside protection. It should be noted that in some accounts I hold that we are simple dividend growth investors with the usual suspects of Proctor and Gamble, Johnson & Johnson, AT& T, McDonald's, Wal-Mart, Pepsico, etc.
I understand and appreciate the simplicity and lack of stress that the dividend growth investor exists in! That being said, I believe I've learned methods that enhance the returns of the dividend growth strategy and which offer greater downside protection. It should be noted that in some accounts I hold that we are simple dividend growth investors with the usual suspects of Proctor and Gamble, Johnson & Johnson, AT& T, McDonald's, Wal-Mart, Pepsico, etc.
Thursday, December 22, 2011
Profitable Trade: Exxon Mobil (XOM) Covered Call
Today I took profits in XOM in a traditional IRA. The transaction looks like this:
12/12/2011 BTC 1 XOM Dec 17 @ 4.6 -470.76
12/12/2011 STO 1 XOM Jan 21 2012 @ 5.6 +549.22
12/22/2011 BTC 1 XOM Jan 21 2012 @ 9.35 -945.76
12/22/2011 Sold 100 XOM @ 84.19 +8408.94
We made $452.64 on this transaction in 13 weeks. Our average out of pocket in this trade was ~$7200. This equates to ~6.3% return or 25.14% annual.
With the run up in the price we pretty much drained all the time decay out of this trade. By closing out early we have more powder in the keg for the next downturn.
09/30/2011 13:44:08 Bought 100 XOM @ 74.3982 -7,449.81
09/30/2011 13:44:50 Sold 1 XOM Oct 7 2011 75.0
Call @ 1.19 108.23
10/07/2011 10:15:56 Bought 1 XOM Oct 7 2011 75.0
Call @ 0.05 -5.02
10/07/2011 10:16:25 Sold 1 XOM Oct 14 2011 75.0
Call @ 0.76 65.23
10/13/2011 09:59:16 Bought 1 XOM Oct 14 2011 75.0
Call @ 1.62 -172.76
10/13/2011 09:59:48 Sold 1 XOM Nov 19 2011 75.0
Call @ 3.35 324.23
11/11/2011 15:11:53 Bought 1 XOM Nov 19 2011 75.0
Call @ 4.6 -470.76
11/11/2011 15:12:58 Sold 1 XOM Dec 17 2011 75.0
Call @ 5.45 534.22
12/09/2011 Dividend +47.00
12/12/2011 BTC 1 XOM Dec 17 @ 4.6 -470.76
12/12/2011 STO 1 XOM Jan 21 2012 @ 5.6 +549.22
12/22/2011 BTC 1 XOM Jan 21 2012 @ 9.35 -945.76
12/22/2011 Sold 100 XOM @ 84.19 +8408.94
We made $452.64 on this transaction in 13 weeks. Our average out of pocket in this trade was ~$7200. This equates to ~6.3% return or 25.14% annual.
With the run up in the price we pretty much drained all the time decay out of this trade. By closing out early we have more powder in the keg for the next downturn.
Saturday, December 17, 2011
Trade Continuation - Microsoft (MSFT) Covered Call
Today I continued a MSFT investment in a traditional IRA as follows:
11/01/2011 13:29:58 Bought 200 MSFT @ 26.029 -5,215.79
11/01/2011 13:31:11 Sold 2 MSFT Nov 4 2011 26.0
Call @ 0.36 60.47
11/04/2011 14:52:03 Bought 2 MSFT Nov 04 2011
26.0 Call @ 0.25 -61.52
11/04/2011 14:52:44 Sold 2 MSFT Dec 17 2011 26.0
Call @ 0.88 164.45
12/08/2011 Dividend 40.00
12/16/2011 BTC 2 MSFT Dec 17 2011 26 Calls @ .05 -10.03
12/16/2011 STO 2 MSFT Jan 21 2011 26 Calls @.67 112.47
This roll lowered our amount invested to $4899.53 or $24.50/share. We are successfully collecting monthly income in addition to the dividend. If we get called away we will make ~280.00 after commissions. This equates to a return of ~5.4% on our initial investment or 25.54% annual.
Thursday, December 8, 2011
Swing Low Sweet Sentiment
We've got cash at the ready. We just need the herd to swing the pendulum back toward fear. Downright Damien Omen, Exorcist panic and horror would be this gal's preference. Trade the Psychology, Ride the Lightning...ha.
World economies are in the position of relying on government to set things right. May I have some examples of when that has ultimately worked in the past? Politicians are short sighted. Short sightedness put the world economies in the situation we're in. A doctor with broken arms flapping in the wind can't perform surgery on the gasping patient.
When the market heads back south I will be at the ready to sell naked and covered puts below the support levels of Dividend Champions. I will be rolling my existing covered call positions to keep the premiums and dividends pouring in. I love my Double D's! (that's double dividends fellas..). I also love to trade precious metals ETF's with options. I believe we are in the midst of a long term secular bull in precious metals. If you'll search under GDX, GLD and SLV on this blog you'll find several examples of "have your cake and eat it" trades.
On covered calls we will look closely at in the money and at the money strikes first. I'm a believer that we now live in a world where we are witnessing the end of growth. I'll give up capital appreciation for boring double digit income returns.
As for now, I'm licking my lips...and waiting...
World economies are in the position of relying on government to set things right. May I have some examples of when that has ultimately worked in the past? Politicians are short sighted. Short sightedness put the world economies in the situation we're in. A doctor with broken arms flapping in the wind can't perform surgery on the gasping patient.
When the market heads back south I will be at the ready to sell naked and covered puts below the support levels of Dividend Champions. I will be rolling my existing covered call positions to keep the premiums and dividends pouring in. I love my Double D's! (that's double dividends fellas..). I also love to trade precious metals ETF's with options. I believe we are in the midst of a long term secular bull in precious metals. If you'll search under GDX, GLD and SLV on this blog you'll find several examples of "have your cake and eat it" trades.
On covered calls we will look closely at in the money and at the money strikes first. I'm a believer that we now live in a world where we are witnessing the end of growth. I'll give up capital appreciation for boring double digit income returns.
As for now, I'm licking my lips...and waiting...
Tuesday, December 6, 2011
Teetering?
Well we had a nice little rally. It feels long in the tooth now. I've taken profit and moved several income positions to cash so I can have powder in the keg when the media starts screaming that the economic world is about to collapse...again.
I recently posted an article called Trading a Bipolar Market which I believe sets forth a good way to profit in volatile markets such as this. Swim against the school of fish, stampede against the herd. Buy low, sell high...yada yada. Easier said then done...that is until you calculate your returns. Happy Hunting!
I recently posted an article called Trading a Bipolar Market which I believe sets forth a good way to profit in volatile markets such as this. Swim against the school of fish, stampede against the herd. Buy low, sell high...yada yada. Easier said then done...that is until you calculate your returns. Happy Hunting!
Monday, December 5, 2011
Profitable Trade (SO) Southern Company
I recently closed out the following position in Southern Company in a traditional IRA account. I closed this position as it was basically dead money with most of the time decay drained from the transaction. This series of trades illustrates how using my enhanced income or double dividend strategy one can achieve double dividend returns, even on utility stocks.
- 7/19/11 Bought 100 SO @ 39.94 -4003.98
- 7/19/11 STO 1 Jan 21 2012 40 @ 1.22 +111.25
- 9/6/11 Dividend +47.25
- 11/30/11 BTC 1 Jan 21 2012 40 @ 4.10 -420.76
- 11/30/11 Sold 100 SO @ 43.82 +4372.10
- 12/6/11 Dividend +47.25
Wednesday, November 30, 2011
Profitable Trade: Altria Group (MO) Covered Call....Again
Back to back I closed two Altria Group trades I had going in two different accounts. This one is in a traditional IRA. The DOW was up huge...over 360. This follows my trend of closing out transactions on big up days and opening income transactions on big down days. The investment went as follows:
09/01/2011 10:28:40 Bought 200 MO @ 27.2695 -5,463.89
09/01/2011 10:30:16 Sold 2 MO Oct 22 2011 27.0
Call @ 0.8 148.50
10/11/2011 03:58:13 QUALIFIED DIVIDEND (MO) 82.00
10/18/2011 13:42:00 Bought 2 MO Oct 22 2011 27.0
Call @ 0.67 -145.52
10/18/2011 13:42:54 Sold 2 MO Nov 19 2011 27.0
Call @ 1.05 198.47
11/11/2011 15:39:19 Bought 2 MO Nov 19 2011 27.0
Call @ 0.87 -185.53
11/11/2011 15:40:38 Sold 2 MO Jan 21 2012 27.0
Call @ 1.28 244.47
11/30/2011 BTC 2 MO Jan 21 27 Calls @ 1.67 -345.53
11/30/2011 Sold 200 MO @ 28.47 +5684.26
In this trade we made $217.23 in 3 months. This equates to ~4.1% return or 16.3% annual. This is another bread and butter enhanced income transaction on a great dividend company. In addition, by closing these transactions we increase our cash position to use when sentiment flip flops back toward fear.
11/30/2011 BTC 2 MO Jan 21 27 Calls @ 1.67 -345.53
11/30/2011 Sold 200 MO @ 28.47 +5684.26
In this trade we made $217.23 in 3 months. This equates to ~4.1% return or 16.3% annual. This is another bread and butter enhanced income transaction on a great dividend company. In addition, by closing these transactions we increase our cash position to use when sentiment flip flops back toward fear.
Profitable Trade: Altria Group (MO) Covered Call
- 9/6/11 Bought 200 MO @ 26.57 -5323.63
- 9/6/11 STO 2 MO Oct 22 27's @ .54 +96.50
- 10/11 Dividend +82.00
- 10/21 BTC 2 MO Oct 22 27's @.50 -111.52
- 10/21 STO 2 MO Nov 19 27's @.95 +178.47
- 11/17 BTC 2 MO Nov 19 27's @.72 -155.52
- 11/17 STO 2 MO Jan 21 27's @1.15 +218.47
- 11/30 BTC 2 MO Jan 21 27's @1.64 -339.56
- 11/30 Sold 200 MO @ 28.41 +5672.26
Trading a Bipolar Market
Today the futures are up big, building on Monday's momentum. Last week the world economy was headed toward sure collapse. China is in a bubble...no wait....China's government is taking action to support banks. The end of the Euro...no wait...world bankers are getting together to support the whole world economy. Back and forth it goes...
So what's a gal to do in this mad, mad, man's world? Read the charts baby, that's what. I'm selling out of the money puts at or below a stocks lows during the last year. I'm only entering new income positions when the bipolar meter is set to doom, gloom, dog and cats living together.
With such high volatility there are above average premiums to be collected out there. Even deep in the money covered calls are providing double digit annual returns. Lovin' it! Yumsicle!...*clears throat*...where was I? Oh yeah..
And all this money to be made on widow and orphan blue chip Dividend Champions. If one wants to get a little racy they can trade the precious metals etf's like GLD, SLV and GDX. They don't pay dividends but the option premiums are juicy and this gal loves long term secular bulls.
Be greedy when others are fearful. Be fearful when others are greedy. Buy low, sell high. Only invest in those stocks that you are happy to own for the long haul. Only roll options for a credit. Don't stand under a tree holding a golf club when it's lightning. And finally: What's sexier then a hot babe who can trade the average guy under the table? :)
So what's a gal to do in this mad, mad, man's world? Read the charts baby, that's what. I'm selling out of the money puts at or below a stocks lows during the last year. I'm only entering new income positions when the bipolar meter is set to doom, gloom, dog and cats living together.
With such high volatility there are above average premiums to be collected out there. Even deep in the money covered calls are providing double digit annual returns. Lovin' it! Yumsicle!...*clears throat*...where was I? Oh yeah..
And all this money to be made on widow and orphan blue chip Dividend Champions. If one wants to get a little racy they can trade the precious metals etf's like GLD, SLV and GDX. They don't pay dividends but the option premiums are juicy and this gal loves long term secular bulls.
Be greedy when others are fearful. Be fearful when others are greedy. Buy low, sell high. Only invest in those stocks that you are happy to own for the long haul. Only roll options for a credit. Don't stand under a tree holding a golf club when it's lightning. And finally: What's sexier then a hot babe who can trade the average guy under the table? :)
Monday, November 28, 2011
Bear Trap?
Well the world isn't coming to an end so futures are pointing to a higher open. Is this a short term market bottom? Should we use the upswing to close out positions for a profit and move to cash? I get the feeling that once again when doom, gloom and fear are the news of the day that it's time to open new income positions. It ain't easy swimming against the current but it is probably the most profitable. Be greedy when others are fearful, be fearful when others are greedy says Mr. Buffett.
Friday, November 25, 2011
Sold Conoco Phillips (COP) Put
Today with the market up a smidgen and COP trading at ~66.95 I entered into the following transaction in a taxable account:
STO 1 COP Jan 21 2012 60 Put @ 1.30 +119.23
Conoco Phillips has a rising dividend and is a stock I'm interested in holding long term. It is a Buffett favorite. In reading the charts, like a psychic reads tea leaves...ha, it is revealed to me that every time COP has hit 60 in the last year it immediately found support and jumped up like a prairie dog sittin' on a cactus. If assigned to us we'll take COP at ~ 59 which will at that price yield 4.5%. In addition, COP will probably raise it's dividend next quarter. If the put expires worthless we will earn 2% in 57 days which equates to 12.8% annual. If one were to believe in return on margin (ROM) the return on a $781.84 margin requirement is 15.2% or 98% annual.
All the puts I've sold lately are at the very bottom of the last year's trading range. At this point in my trading experience that's about the best I can do. If these stocks fall below the strike prices, we can: 1) accept the stocks and collect dividends and write calls; or 2) roll them out for a credit. Either way they won't have heard the last from this gal! ha!
STO 1 COP Jan 21 2012 60 Put @ 1.30 +119.23
Conoco Phillips has a rising dividend and is a stock I'm interested in holding long term. It is a Buffett favorite. In reading the charts, like a psychic reads tea leaves...ha, it is revealed to me that every time COP has hit 60 in the last year it immediately found support and jumped up like a prairie dog sittin' on a cactus. If assigned to us we'll take COP at ~ 59 which will at that price yield 4.5%. In addition, COP will probably raise it's dividend next quarter. If the put expires worthless we will earn 2% in 57 days which equates to 12.8% annual. If one were to believe in return on margin (ROM) the return on a $781.84 margin requirement is 15.2% or 98% annual.
All the puts I've sold lately are at the very bottom of the last year's trading range. At this point in my trading experience that's about the best I can do. If these stocks fall below the strike prices, we can: 1) accept the stocks and collect dividends and write calls; or 2) roll them out for a credit. Either way they won't have heard the last from this gal! ha!
Thursday, November 17, 2011
Trade Continuation: Altria Group (MO) Covered Call
Today in a taxable account with MO at 27.65 and the DOW down 16 I continued the following transaction:
With these transactions I have the amount invested down to $5015.23 or $25.07/share. Altria goes ex-dividend December 23rd. If we don't get called out we will receive an additional $82 and we will lower our amount invested to $4933.23 or $24.66/share. I'm happy if we do get called out as that will make $364 in 15 weeks or ~6.9% which equates to ~23.9% annually. That's a nice return for such a conservative investment. I'm just as happy not getting called out, collecting the dividend and writing new calls sometime in the future.
Altria Group is a great stock for enhanced income, double dividend investment strategies. I would wait to enter a new position, however, until the stock is in the bottom one quarter to one third of it's trading cycle.
- 9/6/11 Bought 200 MO @ 26.57 -5323.63
- 9/6/11 STO 2 MO Oct 22 27's @ .54 +96.50
- 10/11 Dividend +82.00
- 10/21 BTC 2 MO Oct 22 27's @.50 -111.52
- 10/21 STO 2 MO Nov 19 27's @.95 +178.47
- 11/17 BTC 2 MO Nov 19 27's @.72 -155.52
- 11/17 STO 2 MO Jan 21 27's @1.15 +218.47
With these transactions I have the amount invested down to $5015.23 or $25.07/share. Altria goes ex-dividend December 23rd. If we don't get called out we will receive an additional $82 and we will lower our amount invested to $4933.23 or $24.66/share. I'm happy if we do get called out as that will make $364 in 15 weeks or ~6.9% which equates to ~23.9% annually. That's a nice return for such a conservative investment. I'm just as happy not getting called out, collecting the dividend and writing new calls sometime in the future.
Altria Group is a great stock for enhanced income, double dividend investment strategies. I would wait to enter a new position, however, until the stock is in the bottom one quarter to one third of it's trading cycle.
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