On October 10, 2012 I continued the following transaction:
08/24/12 STO 5 INTC Oct 20 2012 23 Puts @.35 161.20
10/10/12 BTC 5 INTC Oct 20 2012 23 Puts @1.22 -623.79
10/10/12 STO 5 INTC Nov 17 2012 23 Puts @1.53 761.14
This is how I played the Intel tank on these puts last month. On this trade I have now brought in $298.55 in option premium. If put to me my cost basis is down to $22.40. I anticipate rolling these puts out, rolling out and reducing a contract or rolling down and out. All this will occur prior to option expiration and will only be done for a net credit.
Even though INTC has tanked I am still bringing in regular income and reducing my cost basis in the stock. Unfortunately, my margin maintenance has increased substantially and of this writing it sits at $2800.
I very recently thought Intel had bottomed but now there are rumors that Apple wants to build their own processors and not use Intel anymore. Intel is a huge multinational with a rising dividend so I'm not too worried. I will keep on: rolling, rolling, rolling...
Showing posts with label rising dividend. Show all posts
Showing posts with label rising dividend. Show all posts
Tuesday, November 6, 2012
Sunday, September 16, 2012
New Trade: Southern Company (SO) Naked Puts
On Friday when SO dipped below 45 to ~44.70 I entered into the following transaction:
09/14/12 STO 3 SO Nov 17 43 2012 Puts @.5 137.69
With Bernanke's latest moves the "risk on" trades are in vogue. That provides weakness/opportunity in the "risk off" trades, i.e., utilities, telecom and healthcare. Southern Company is my favorite utility stock and it has a rising dividend. I have been patiently waiting for the stock to drop below 45 so I could write some out of the money puts.
SO currently has a yield of 4.35%. If put to us our yield on cost will be 4.61% with another dividend rise announcement expected in April 2013. I feel that the yield will buoy the price of the stock.
This is a 64 day trade with an initial maintenance requirement of $2218. If these puts expire worthless we will earn 6.2% return on maintenance or 35.36% annual. If the stock price drops I anticipate volatility will rise and we will be able to roll down and/or out for a net credit. As such, an exit strategy is in place.
This trade illustrates the remarkable returns that naked put selling can generate. I mean this is a utility stock for goodness sake :)
09/14/12 STO 3 SO Nov 17 43 2012 Puts @.5 137.69
With Bernanke's latest moves the "risk on" trades are in vogue. That provides weakness/opportunity in the "risk off" trades, i.e., utilities, telecom and healthcare. Southern Company is my favorite utility stock and it has a rising dividend. I have been patiently waiting for the stock to drop below 45 so I could write some out of the money puts.
SO currently has a yield of 4.35%. If put to us our yield on cost will be 4.61% with another dividend rise announcement expected in April 2013. I feel that the yield will buoy the price of the stock.
This is a 64 day trade with an initial maintenance requirement of $2218. If these puts expire worthless we will earn 6.2% return on maintenance or 35.36% annual. If the stock price drops I anticipate volatility will rise and we will be able to roll down and/or out for a net credit. As such, an exit strategy is in place.
This trade illustrates the remarkable returns that naked put selling can generate. I mean this is a utility stock for goodness sake :)
Wednesday, September 12, 2012
New Trade: Phillip Morris (PM) Naked Puts
Today with Phillip Morris showing weakness and trading down below $87/share I entered into the following transaction:
09/12/12 STO 2 PM Dec 22 2012 80 Puts @1.23 234.50
I've wanted to trade PM for a while but never had the opportunity as it was in a constant incline while I like to sell puts on weakness. Phillip Morris is a blue chip company with a rising dividend. In fact it raised it's quarterly dividend today to .85/share which increases PM's yield to 3.9%. The stock has been rising but appears to have support above 80. If put to us our yield on cost will be 4.3%.
If the puts expire worthless we will earn $234.50 in 101 days on initial margin maintenance of $2100. This equates to an 11.16% return on maintenance or 40.33% annual. We have downside protection in the neighborhood of 10%. In the event the stock tanks we should be able to roll down and out for a net credit. As such, an exit strategy is in place.
09/12/12 STO 2 PM Dec 22 2012 80 Puts @1.23 234.50
I've wanted to trade PM for a while but never had the opportunity as it was in a constant incline while I like to sell puts on weakness. Phillip Morris is a blue chip company with a rising dividend. In fact it raised it's quarterly dividend today to .85/share which increases PM's yield to 3.9%. The stock has been rising but appears to have support above 80. If put to us our yield on cost will be 4.3%.
If the puts expire worthless we will earn $234.50 in 101 days on initial margin maintenance of $2100. This equates to an 11.16% return on maintenance or 40.33% annual. We have downside protection in the neighborhood of 10%. In the event the stock tanks we should be able to roll down and out for a net credit. As such, an exit strategy is in place.
Wednesday, September 5, 2012
New Trade: ConocoPhillips (COP) Naked Puts
Today when the Dow was down less than 1% and COP had sunk to ~54.80 I entered into the following transaction:
09/05/12 STO 3 COP Oct 20 50 Puts @.38 $101.73
ConocoPhillips is a rising dividend, blue chip, oil & gas company. I have been waiting for it to show some weakness, i.e., drop below 55, as I love it's yield as a buoy for the stock price. Today I got my wish although I must admit that the lack of news was a bit disconcerting. Hopefully there are not problems brewing behind closed doors.
This is a 45 day trade that uses ~$1600 in margin maintenance. If the puts expire worthless I will earn 6.36% return on maintenance in 45 days or 51.6% annual.
If COP were to drop below 50 and the stock was put to us our yield on cost would be a whopping 5.3%. I like this yield amount as a buoy of the stock price. If the price tanks I feel confident that I could roll down and/or out for a net credit. As such, an exit strategy is in place.
I have been enjoying writing naked puts far out of the money because the maintenance requirement is so low. This allows me to enjoy higher returns on maintenance and to commit less capital to any one trade. In addition, the downside protection is very high making this a comfortable yet probably profitable setup.
09/05/12 STO 3 COP Oct 20 50 Puts @.38 $101.73
ConocoPhillips is a rising dividend, blue chip, oil & gas company. I have been waiting for it to show some weakness, i.e., drop below 55, as I love it's yield as a buoy for the stock price. Today I got my wish although I must admit that the lack of news was a bit disconcerting. Hopefully there are not problems brewing behind closed doors.
This is a 45 day trade that uses ~$1600 in margin maintenance. If the puts expire worthless I will earn 6.36% return on maintenance in 45 days or 51.6% annual.
If COP were to drop below 50 and the stock was put to us our yield on cost would be a whopping 5.3%. I like this yield amount as a buoy of the stock price. If the price tanks I feel confident that I could roll down and/or out for a net credit. As such, an exit strategy is in place.
I have been enjoying writing naked puts far out of the money because the maintenance requirement is so low. This allows me to enjoy higher returns on maintenance and to commit less capital to any one trade. In addition, the downside protection is very high making this a comfortable yet probably profitable setup.
Tuesday, September 4, 2012
New Trade: Caterpillar (CAT) Naked Puts
Today with the Dow down 90 points and CAT down to $82.20 I entered into the following transaction:
09/04/12 STO 2 CAT Sep22 2012 77.5 Puts @.57 102.46
Caterpillar is a blue chip, rising dividend stock with high volume and high volatility. CAT has been raising it's dividend for 19 years and the last rise was very healthy which I take as a vote of confidence from management. I've been watching Caterpillar for signs of weakness to enter a position and today provided that. There appears to be strong support for CAT at $80/share.
This is an 18 day trade with only 13 days of active trading included in those 18 days. If these puts expire worthless we will earn 5.38% on $1905 of margin maintenance or 109% annual. If put to us our yield on cost will be 2.7% which is high for CAT. If the stock drops we should have ample opportunity to roll down and/or out for a net credit. As such, we have an exit strategy in place.
09/04/12 STO 2 CAT Sep22 2012 77.5 Puts @.57 102.46
Caterpillar is a blue chip, rising dividend stock with high volume and high volatility. CAT has been raising it's dividend for 19 years and the last rise was very healthy which I take as a vote of confidence from management. I've been watching Caterpillar for signs of weakness to enter a position and today provided that. There appears to be strong support for CAT at $80/share.
This is an 18 day trade with only 13 days of active trading included in those 18 days. If these puts expire worthless we will earn 5.38% on $1905 of margin maintenance or 109% annual. If put to us our yield on cost will be 2.7% which is high for CAT. If the stock drops we should have ample opportunity to roll down and/or out for a net credit. As such, we have an exit strategy in place.
Sunday, August 19, 2012
Profitable Trade: Freeport-McMoran (FCX) Naked Puts
On Friday the following puts expired worthless:
7/24/12 STO 3 FCX Aug 18 2012 30 Puts @.45 $122.75
At the time I entered into this trade FCX was trading at $32.50/share. This was a 25 day trade with ~$1200 in average margin maintenance. Margin maintenance was reduced from the initial amount of $1600 due to the rise of the underlying stock.
Our return on maintenance was 10.22% or 149% annual. The returns are inflated because this is a volatile security. It is a great stock to trade in my opinion as it has fairly concrete support levels, a great rising dividend, high liquidity and high volatility. This will definitely be one I trade again. I would like to see the stock drop back a bit first, preferably to 32 and change.
7/24/12 STO 3 FCX Aug 18 2012 30 Puts @.45 $122.75
At the time I entered into this trade FCX was trading at $32.50/share. This was a 25 day trade with ~$1200 in average margin maintenance. Margin maintenance was reduced from the initial amount of $1600 due to the rise of the underlying stock.
Our return on maintenance was 10.22% or 149% annual. The returns are inflated because this is a volatile security. It is a great stock to trade in my opinion as it has fairly concrete support levels, a great rising dividend, high liquidity and high volatility. This will definitely be one I trade again. I would like to see the stock drop back a bit first, preferably to 32 and change.
Thursday, July 26, 2012
New Trade: Freeport-McMoran (FCX) Naked Puts
On Tuesday I entered into the following transaction:
7/24/12 STO 3 FCX Aug 18 2012 30 Puts @.45 $122.75
At the time I entered into this trade FCX was trading at $32.50/share. This is a 25 day trade with ~$1600 in margin maintenance. If these puts expire worthless our return on maintenance is 7.67% or 112% annual. The returns are inflated because this is a volatile security. In the event this stock drops I feel confident we will be able to roll out and down for a net credit. As such, an exit strategy is in place.
If put to us at 29.70 or so, FCX will have a yield on cost of 4.2%. Theoretically, that should buoy the stock. FCX has a rising dividend.
7/24/12 STO 3 FCX Aug 18 2012 30 Puts @.45 $122.75
At the time I entered into this trade FCX was trading at $32.50/share. This is a 25 day trade with ~$1600 in margin maintenance. If these puts expire worthless our return on maintenance is 7.67% or 112% annual. The returns are inflated because this is a volatile security. In the event this stock drops I feel confident we will be able to roll out and down for a net credit. As such, an exit strategy is in place.
If put to us at 29.70 or so, FCX will have a yield on cost of 4.2%. Theoretically, that should buoy the stock. FCX has a rising dividend.
Tuesday, July 24, 2012
Profitable Trade: GDX Naked Puts
On Friday I closed the following transaction for a net profit:
03/19/2012 STO 3 GDX Jun 16 2012 45 Puts@.99 284.71
06/07/2012 BTC 3 GDX Jun 16 2012 45 Puts@.68 -216.28
06/07/2012 STO 3 GDX Jul 21 2012 42 Puts@.99 284.71
07/20/2012 BTC 3 GDX Jul 21 2012 42 Puts @.55 -177.28
In this trade we generated $175.86 in 4 months on ~2600 in margin maintenance. This equates to a return of 6.76% or 20.29% annual. This trade shows the power of naked puts and the ability to roll them down and out for a net credit. Even though GDX continued to tank throughout this transaction we were able to still turn a profit.
This one was a bit too much of a wild ride for my temperament, however, so I will probably return to trading blue chip stocks with a rising dividend. Right now I'm watching the weakness in MSFT and INTC closely. If MSFT drops below 29 and INTC gets in the low 24's it will be hard not to pull the trigger on some new naked put trades.
03/19/2012 STO 3 GDX Jun 16 2012 45 Puts@.99 284.71
06/07/2012 BTC 3 GDX Jun 16 2012 45 Puts@.68 -216.28
06/07/2012 STO 3 GDX Jul 21 2012 42 Puts@.99 284.71
07/20/2012 BTC 3 GDX Jul 21 2012 42 Puts @.55 -177.28
In this trade we generated $175.86 in 4 months on ~2600 in margin maintenance. This equates to a return of 6.76% or 20.29% annual. This trade shows the power of naked puts and the ability to roll them down and out for a net credit. Even though GDX continued to tank throughout this transaction we were able to still turn a profit.
This one was a bit too much of a wild ride for my temperament, however, so I will probably return to trading blue chip stocks with a rising dividend. Right now I'm watching the weakness in MSFT and INTC closely. If MSFT drops below 29 and INTC gets in the low 24's it will be hard not to pull the trigger on some new naked put trades.
Monday, July 9, 2012
New Trade: Intel (INTC) Naked Puts
Today with INTC down to about $25.90 I entered into the following trade:
07/09/12 STO 4 INTC Jul 21 2012 25 Puts @.26 90.99
This is a 12 day trade on a stock I'd like to own long term. It will soon be a member of the Dividend Achiever family. In fact, I expect the news of a dividend raise in the near future.
If these puts expire worthless we will earn 5.3% or 161.21% annual on $1713 in margin maintenance. The returns are inflated due to an earnings release set for July 17. If the stock drops we have many options to roll out and/or down for a net credit. As such, an exit strategy is in place.
Even if the stock doesn't drop I will probably look to roll on a weekly basis, if possible. INTC has weekly options.
07/09/12 STO 4 INTC Jul 21 2012 25 Puts @.26 90.99
This is a 12 day trade on a stock I'd like to own long term. It will soon be a member of the Dividend Achiever family. In fact, I expect the news of a dividend raise in the near future.
If these puts expire worthless we will earn 5.3% or 161.21% annual on $1713 in margin maintenance. The returns are inflated due to an earnings release set for July 17. If the stock drops we have many options to roll out and/or down for a net credit. As such, an exit strategy is in place.
Even if the stock doesn't drop I will probably look to roll on a weekly basis, if possible. INTC has weekly options.
Tuesday, May 29, 2012
Patience me boy...patience
It looks like we're heading to a higher open so I doubt I will enter into any new positions today. The stocks I am looking at right now are Sysco, Intel, Microsoft, Southern Company, Proctor & Gamble, Lowe's and Johnson & Johnson. Rising dividends for all. I also have one eye on Exxon Mobil.
I am waiting for some fear and/or panic selling to kick in. I would be looking at the June strike but I will be on vacation during that expiration and frankly I don't want the concern. As such, I'm looking at the July and August strikes.
With the recent pullback, out of the money puts with adequate premiums have become more in line with support levels. One or more large days in the red ought to provide more than enough "Oh my God" type opportunities. Swing at the fat pitch. Patience me boy....patience.
Re my GDX trades: If I can roll down and out my GDX June 45's to July 43's and get a net credit of greater than $100 I will probably take it. If I do, I feel I'm in the driver's seat for these to end up as profitable trades. BTW past experience made it clear not to bail on GDX when it was tanking as I felt they were flushing out the weak hands. In addition there were so many strikes to roll out to there were multiple continuation strategies. Finally, the fundamentals are/have been in place for rising precious metals.
I am waiting for some fear and/or panic selling to kick in. I would be looking at the June strike but I will be on vacation during that expiration and frankly I don't want the concern. As such, I'm looking at the July and August strikes.
With the recent pullback, out of the money puts with adequate premiums have become more in line with support levels. One or more large days in the red ought to provide more than enough "Oh my God" type opportunities. Swing at the fat pitch. Patience me boy....patience.
Re my GDX trades: If I can roll down and out my GDX June 45's to July 43's and get a net credit of greater than $100 I will probably take it. If I do, I feel I'm in the driver's seat for these to end up as profitable trades. BTW past experience made it clear not to bail on GDX when it was tanking as I felt they were flushing out the weak hands. In addition there were so many strikes to roll out to there were multiple continuation strategies. Finally, the fundamentals are/have been in place for rising precious metals.
Monday, May 21, 2012
Opportunity Alert: Lowe's (LOW)
I see that Lowe's is getting hammered due to it's latest quarterly report. Don't catch a falling knife today, however, watch when it seems to have bottomed and write short term out of the money naked puts. I see that the July 22's are really juicy, for example. Lowe's is set to raise it's dividend next quarter and they have been increasing at a greater than 10% rate so this should buoy the stock.
5/29 note: this would've been a goodie...
5/29 note: this would've been a goodie...
Friday, March 30, 2012
New Trade: Proctor & Gamble (PG) Naked Puts
Yesterday in a taxable account I entered into the following transaction:
03/29/2012 STO 2 PG July 21 2012 62.5 Puts @.88 164.47
Proctor & Gamble is a tried and true Dividend Champion. It was showing a bit of weakness yesterday trading at 66 and change so I pulled the trigger on this little trade. PG is set to raise it's dividend next quarter so the share price should be supported a bit by the increase in yield. As of now the yield is 3.1%. If put to us our yield on cost, with the raise, will exceed 3.6% which is well above the historical average. The maintenance requirement on this trade is ~$2000. If these puts expire worthless we will earn $164.47 in 114 days on $2000 of margin maintenance. This equates to an 8.2% return or 26.25% annual. At this price we should be able to roll out and down for a net credit so we have an exit strategy in place.
03/29/2012 STO 2 PG July 21 2012 62.5 Puts @.88 164.47
Proctor & Gamble is a tried and true Dividend Champion. It was showing a bit of weakness yesterday trading at 66 and change so I pulled the trigger on this little trade. PG is set to raise it's dividend next quarter so the share price should be supported a bit by the increase in yield. As of now the yield is 3.1%. If put to us our yield on cost, with the raise, will exceed 3.6% which is well above the historical average. The maintenance requirement on this trade is ~$2000. If these puts expire worthless we will earn $164.47 in 114 days on $2000 of margin maintenance. This equates to an 8.2% return or 26.25% annual. At this price we should be able to roll out and down for a net credit so we have an exit strategy in place.
Wednesday, March 28, 2012
New Trade: Johnson & Johnson (JNJ) Naked Puts
Today at the close of the market I entered into the following trade:
03/28/2012 STO 2 JNJ Jul 21 2012 62.5 Puts @.95 178.51
JNJ, one of the bluest of the blue chip Dividend Champions, was trading at just under 65 at the time I entered this trade. If these puts expire worthless we will earn $178.51 in 115 days on ~$2200 of margin maintenance. This equates to an 8.1% return on maintenance or 25.7% annual. JNJ currently yields 3.5% and it's set to hike it's dividend next quarter. If put to me the yield on cost will be around 4%. These puts were written near JNJ's support level. If the stock drops I feel confident I will be able to roll out and down for a net credit. As such, I have an exit strategy in place.
03/28/2012 STO 2 JNJ Jul 21 2012 62.5 Puts @.95 178.51
JNJ, one of the bluest of the blue chip Dividend Champions, was trading at just under 65 at the time I entered this trade. If these puts expire worthless we will earn $178.51 in 115 days on ~$2200 of margin maintenance. This equates to an 8.1% return on maintenance or 25.7% annual. JNJ currently yields 3.5% and it's set to hike it's dividend next quarter. If put to me the yield on cost will be around 4%. These puts were written near JNJ's support level. If the stock drops I feel confident I will be able to roll out and down for a net credit. As such, I have an exit strategy in place.
Saturday, February 11, 2012
New Trade: Pepsico (PEP) Naked Puts
Two days ago in a retiree's taxable account I entered into the following trade:
02/09/2012 STO 3 PEP Apr 21 2012 60 Puts @.54 149.71
I entered into this trade when PEP had tanked down to 64 after it's quarterly report. As stated in my prior post, it has been my experience that when blue chip Dividend Champions release a quarterly report which disappoints it may tank briefly before rising to it's prior price. These were written well below the tank and if put to us the yield on cost will be 3.46% with a dividend rise expected in June. If these puts expire worthless we will earn 5.34% in 73 days on $2800 of margin maintenance which equates to 26.7% annual. If the stock tanks all the way to 60 or below I am confident we can roll the position for a credit.
02/09/2012 STO 3 PEP Apr 21 2012 60 Puts @.54 149.71
I entered into this trade when PEP had tanked down to 64 after it's quarterly report. As stated in my prior post, it has been my experience that when blue chip Dividend Champions release a quarterly report which disappoints it may tank briefly before rising to it's prior price. These were written well below the tank and if put to us the yield on cost will be 3.46% with a dividend rise expected in June. If these puts expire worthless we will earn 5.34% in 73 days on $2800 of margin maintenance which equates to 26.7% annual. If the stock tanks all the way to 60 or below I am confident we can roll the position for a credit.
New Trade: Pepsico (PEP) Naked Puts
A couple of days ago in a taxable account I entered into the following trade:
02/09/2012 STO 2 PEP Mar 17 2012 62.5 Puts @.7 128.51
At the time I entered into this transaction PEP had tanked more than two points down to ~64 based upon it's quarterly report. My experience has been that when a blue chip stalwart tanks after a quarterly report it usually is a knee jerk reaction and it will slowly work it's way back. I wrote the puts under where it tanked and if it tanks more I feel that I will be able to roll the position for a credit and wait for the stock to drift back up. If put to me the yield on cost would be 3.3% with a dividend raise expected in the June quarter. If these puts expire worthless we will earn $128.51 in 38 days on margin maintenance of $2400. This equates to a 5.35% return or 51.4% annual.
02/09/2012 STO 2 PEP Mar 17 2012 62.5 Puts @.7 128.51
At the time I entered into this transaction PEP had tanked more than two points down to ~64 based upon it's quarterly report. My experience has been that when a blue chip stalwart tanks after a quarterly report it usually is a knee jerk reaction and it will slowly work it's way back. I wrote the puts under where it tanked and if it tanks more I feel that I will be able to roll the position for a credit and wait for the stock to drift back up. If put to me the yield on cost would be 3.3% with a dividend raise expected in the June quarter. If these puts expire worthless we will earn $128.51 in 38 days on margin maintenance of $2400. This equates to a 5.35% return or 51.4% annual.
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.
Thursday, January 19, 2012
New Trade: Johnson and Johnson (JNJ) Naked Puts
Today in a taxable account with JNJ trading at just under 65 I entered into the following transaction:
01/19/2012 STO 4 JNJ Apr 21 2012 60 Puts @.77 294.89
JNJ is obviously a long term hold. It is a dividend aristocrat, dividend champion, blue chip, widow and orphan core holding. If put to us our yield on cost will be over 3.8% with a dividend increase expected shortly after. We could then write covered calls on the position. If the puts expire worthless we will earn 8.73% in 93 days on margin maintenance of $3377.60 which equates to 34.26% annual. Of course we could choose to roll the position, we'll just have to see how things shake out.
01/19/2012 STO 4 JNJ Apr 21 2012 60 Puts @.77 294.89
JNJ is obviously a long term hold. It is a dividend aristocrat, dividend champion, blue chip, widow and orphan core holding. If put to us our yield on cost will be over 3.8% with a dividend increase expected shortly after. We could then write covered calls on the position. If the puts expire worthless we will earn 8.73% in 93 days on margin maintenance of $3377.60 which equates to 34.26% annual. Of course we could choose to roll the position, we'll just have to see how things shake out.
Friday, January 13, 2012
New Trade: Conoco-Phillips (COP) Covered Call
Today in a traditional IRA I entered into the following transaction:
01/13/2012 Bought 200 COP @ 70.29 -14,067.97
01/13/2012 STO 2 COP Jan 21 2012 70 Calls @.99 186.47
Our out of pocket on this transaction is $13881.50 or $69.41/share. There are only 4 market days until options expiry. If this is called away it will provide a return of $100 in 7 days or .007% which equates to 36.4% annual. This is an issue we like long term and there is a good chance we'll roll this position. There will be a spin-off company later in the year as well as a dividend raise in the next quarter.
01/13/2012 Bought 200 COP @ 70.29 -14,067.97
01/13/2012 STO 2 COP Jan 21 2012 70 Calls @.99 186.47
Our out of pocket on this transaction is $13881.50 or $69.41/share. There are only 4 market days until options expiry. If this is called away it will provide a return of $100 in 7 days or .007% which equates to 36.4% annual. This is an issue we like long term and there is a good chance we'll roll this position. There will be a spin-off company later in the year as well as a dividend raise in the next quarter.
Monday, December 19, 2011
Trade Continuation AT&T (T) Covered Call
Today in a traditional IRA I continued the following transaction:
06/27/2011 Bought 200 T @ 30.889 -6187.79
06/27/2011 STO 2 Aug 20 2011 31 Calls @.53 +94.50
08/01/2011 Dividend +86.00
08/03/2011 BTC 2 Aug 20 2011 31 Calls@.05 -10.00
08/03/2011 STO 2 Jan 21 2012 31 Calls@.66 +120.50
11/01/2011 Dividend +86.00
11/22/2011 BTC 2 Jan 21 2012 31 Calls@.05 -10.00
12/02/2011 STO 2 Dec 17 2011 29 Calls@.38 +64.47
12/19/2011 STO 2 Feb 18 2012 29 Calls@.59 +106.47
With this latest transaction we have lowered our out of pocket to $5649.85 or $28.24/share. AT&T goes ex-dividend on January 6 with their raised dividend of .44/share. We might get called out but I doubt it since our expiration date is 6 weeks later.
We are recovering nicely in this trade after arguably paying too much for the stock to start. I wasn't religiously following the charts and only entering an investment at the bottom of the trade cycle when I entered this trade. Nevertheless if we collect the dividend our amount out of pocket will drop to $5561.85 or $27.81/share.
If we get called away in February and don't roll the position our profit will be $218.15 which equates to 3.5% or 5.3% annual. This is not great but it is still a profit on a stock that dropped in price from the time we bought it. I like the stock at cheaper entry points and have written some out of the money puts at the 27.5 strike price in other accounts.
06/27/2011 Bought 200 T @ 30.889 -6187.79
06/27/2011 STO 2 Aug 20 2011 31 Calls @.53 +94.50
08/01/2011 Dividend +86.00
08/03/2011 BTC 2 Aug 20 2011 31 Calls@.05 -10.00
08/03/2011 STO 2 Jan 21 2012 31 Calls@.66 +120.50
11/01/2011 Dividend +86.00
11/22/2011 BTC 2 Jan 21 2012 31 Calls@.05 -10.00
12/02/2011 STO 2 Dec 17 2011 29 Calls@.38 +64.47
12/19/2011 STO 2 Feb 18 2012 29 Calls@.59 +106.47
With this latest transaction we have lowered our out of pocket to $5649.85 or $28.24/share. AT&T goes ex-dividend on January 6 with their raised dividend of .44/share. We might get called out but I doubt it since our expiration date is 6 weeks later.
We are recovering nicely in this trade after arguably paying too much for the stock to start. I wasn't religiously following the charts and only entering an investment at the bottom of the trade cycle when I entered this trade. Nevertheless if we collect the dividend our amount out of pocket will drop to $5561.85 or $27.81/share.
If we get called away in February and don't roll the position our profit will be $218.15 which equates to 3.5% or 5.3% annual. This is not great but it is still a profit on a stock that dropped in price from the time we bought it. I like the stock at cheaper entry points and have written some out of the money puts at the 27.5 strike price in other accounts.
AT&T Raises Dividend by only 1 cent...again
From Dow Jones: AT&T Inc.'s (T) board raised the telecommunications heavyweight's quarterly dividend a penny a share, or 2.3%, marking the 28th straight year of increases.
AT&T increased the dividend to 44 cents a share, with the increase costing roughly $59.3 million each payout. The company had $10.76 billion in cash and cash equivalents on its balance sheet at the end of the third quarter.
Chairman and Chief Executive Randall Stephenson said the company's financial discipline throughout the economic downturn has allowed it to pay down debt, invest to support more customer usage and generate strong cash flows.
"We know millions of our owners are individuals and they count on their AT&T dividend each quarter," he said.
Many companies have bolstered dividends lately, some to put accumulated cash to work, others to appeal to investors wearied by market volatility.
AT&T most recently reported higher third-quarter earnings driven by better-than-expected growth in wireless subscriptions.
AT&T shares were down 6 cents at $28.73 in recent trading.
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