On January 2, 2015 I sold a put option in Royal Bank with an $80.00 strike price. The expiration date was Jan 17, 2015 and the option was assigned as the price fell below the strike price. I previously written a post on this option selling, which you can read about here. As I mention in the link in the last sentence I will sell cover calls. The cover calls will be at an $80.00 strike price unless the stock falls due to the price of oil more and I will change my strategy.
Number of contracts: 1
Strike Price: $80.00
Premium received : $95.00 -$10.95 = $84.05
Adjusted cost base = $80*100-84.05+24.95
Royal Bank of Canada, on the Toronto Stock Exchange, currently pays an annual dividend of $3.00 a share. This represents a yield on cost of 3.778%. Although the dividend wasn't increased for 15 quarters around 2009 due to the financial crisis, the company has a great record of dividend growth. In 2004, the dividend rate was $1.01 and has grown to $2.84, that represents a compound annual growth rate of 12.17% over the last 10 years.
So, if the stock falls I will change my intention on this purchase and average down. I believe in this company as the Canadian Banks are known as one of the best banks in the world.
I will update my investment account spreadsheet in early February.
Disclosure: Continue to hold RY and sell cover calls
I am not a financial planner, financial advisor, accountant or tax attorney. The information on this blog represents my own thoughts and opinions and should not be taken as investment or business advice.
Every individual should do their due diligence to make their own financial decisions based on their financial situation and tolerance for risk.