In the past month, I sold a put option on Roger's Communication Class B shares listing on the Toronto Stock Exchange. In this post, I gave 3 scenarios about what happens if the market goes up, sideways or down.
The put had a strike price of $44.00, and I was paid a premium of $69.00 excluding commissions for making the promise to buy 100 shares at the strike price before or on expiration day. On Friday, June 23, the closing price of RCI.B shares were $42.84. The put option was assigned and the shares showed up in my brokerage account.
Recap: Strike Price: $44.00
Premium paid: $69.00-$10.95 commission = $58.05
Option Assignment Fee : $24.95
ACB = 100 shares * 1contract * $44.00-$58.05+$24.95
Average Price per share = ACB/ # of shares
= $4366.90/100 shares
= $43.6690 per share
Currently RCI.B is paying a quarterly divided of $0.46 or $1.83 annually.
Yield on cost = 1.83/43.6690
= 4.191 %
My average price per share is lowered than if I had just bought the stock. Therefore my money is working harder for me.
In previous post on this trade, I wondered how the shares would show up in my brokerage account if assigned. It shows up as $44.00 as the average price, which is the strike price. So for tax purposes, I have to use the amount of $4366.90 as my ACB.
I plan to write cover calls on this position in Roger's.
I also made a trade in where I bought 6 contracts of a RY.TO $74.00 21 June 2014 put option. This trade did not go in my favor and expired worthless.
Cost = premium - commission
Profit = 0-$285.95
= -285.95 = -100%
Disclosure : Long RCI.B