Sunday, January 11, 2015

Recent Trade

     With the recent New Year's holiday on a Thursday, I decided to take the next day off from work. During this day, I decided to take a look at the markets during that day. As I was looking to average down on one of my positions, the stock price didn't come down to where I wanted to make my entry point.
    I, therefore, decided to look elsewhere. I decided to sell a put option. So on January 2, I sold a put option in Royal Bank of Canada at an $80.00 strike price at a premium of $95.00 excluding commissions. As I am the option seller, I collect the premium minus the commissions up front. The expiry date of this option is January 17, 2014.  If this option is assigned, I plan to write cover calls.
     The banking system we have in Canada is very stable, and all 5 major Canadians banks have paid dividends for a very long time.

Click to Enlarge


Disclosure: I have owned RY in the past as an investment. Long TD, BNS


DISCLAIMER
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.
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4 comments:

  1. LiquidJanuary 13, 2015 at 1:01 AM

    That's a great strategy to earn some extra income while limiting your risk to the stock price. :) Hopefully the contract will expire worthless.

    ReplyDelete
    Replies
    1. Investing PursuitsJanuary 17, 2015 at 9:49 PM

      Liquid,

      The stock price went way lower. The option will get assigned, but Royal Bank is a great company that pays good dividend yield. I am OK holding it and might just average down some if it drops some more.

      Delete
  2. Goosemann JonesJanuary 17, 2015 at 2:28 AM

    Hi, Investing Pursuits.
    Tough luck on the trade. I like the Canadian Banks long term, but this week hit them pretty hard. I do like the strategy, though. Best wishes.

    Goosemann Jones
    Flight to Dividends Blog

    ReplyDelete
    Replies
    1. Investing PursuitsJanuary 17, 2015 at 10:14 PM

      Goosemann Jones,

      Thanks for dropping by. I believe the Canadians banks are great long term investments. With this option being assigned, I will now own 3 of them. As of today, RY, BNS, TD are down 5.89 %, 7.07%, 9.55% YTD on the Toronto Stock Exchange. Royal Bank has fallen the least. Also coming up this month , Bank of Nova Scotia pays its dividend. I am currently doing a FULL DRIP which I have through the transfer agent.

      You can read about my recent purchase of Bank of Nova Scotia, by clicking on the following link or copy and paste in your address bar

      http://investingpursuits.blogspot.com/2014/12/recent-buy_31.html

      Delete

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