Recent Option Trade

         Over the past several months, WestJet Airlines have made announcements to try to grow as a company.  One of the announcements is the start up of their no frills ultra low-cost airline called Swoop. Swoop is suppose to start flying in June, despite the issues with the union.
        WestJet Airlines started in 1996 with 3 planes and is based out of Calgary, Alberta. Almost all of WestJet employees own shares in WJA.TO, as the company always believes "Owners Care".
  
         The price of fuel with oil over $60 a barrel, the union thinking different hiring practices for Swoop, and getting Swoop off the ground has been a negative for the stock in recent months.  The shares have faced resistance around $27 per share.  During the last week, WestJet CEO Gregg Saretzy retires unexpectedly. Gregg Saretzy has led WestJet for nearly a decade.

         At the market opening on Friday, the price of WestJet dropped to $23.00 per share.  I decided to take advantage of this.  I sold 2 WJA,TO April 20 2018 $23 put options at $0.70 per contract.

Summary

   My brokerage charges an option assignment/exercise fee of $24.95. Not all brokerages charge this type of fee.  I know for sure, Interactive Brokers does not charge this fee.

Premiums received minus commissions = $140.00 - $11.95 = $128.05
Option Assignment Fee = $24.95
Annual Dividend = $0.56 per share
Strike Price = $23.00
Expiration Date: April 20 2018
Days to Expiration : 42

Scenario One : Option not assignment 

Total Return = [$128.05 / $4600]*100
                     =  2.78%

 This represents the return for 42 days.  This return sure beats the interest rate on high interest savings accounts.

Annualized return = 2.78% * (365/42)
                              = 24.19%

 The amount of capital required in a margin account is 20% of break even. So, now lets calculate the return on capital

Return on Capital = $128.05 /(0.20*(4600-128.05)) *100
                              = 14.32%

This ROC of 14.32% is the return on capital for 42 days.

Annualized ROC = 14.32% * (365/42)
                            =124.4%

Option Two - Option is Assigned 

Adjusted cost basis = $4600-$128.05 + $24.95
                                = $4496.90

Yield = dividend rate / ACB per share
          = $0.56 / ($4496.90 / 200 )
          = 2.491%

For comparison, I calculated the yield if I just bought 200 shares at $23.00. My brokerage charges $4.95 commission.

Yield = dividend rate / ACB per share
          = $0.56 /[ ($4600+$4.95) / 200]
          = 2.43%

Edit: Option trade was made on Friday not Monday

Photo Credits: www.westjet.com

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.

Dividend Income Update - February 2018

      

        The month of February 2018 is another month of dividend income landing in my accounts. This money is used to help pay my expenses if it is needed. If the money is not needed, it is ALL used to purchase new investments to further increase my cash flow.

       

 Non-registered Accounts 

• Bank of Montreal (BMO) - $32.55
• Cineplex  (CGX) - $14.00
• Emera (EMA) - $56.50
• Enerplus (ERF)  -$ 5.58
• Dream Office REIT   (D.UN)  - $52.58
• Shaw Communications (SJR.B)    - $19.75

TFSA

• A&W Royalties Income Fund (AW.UN) - $5.17
• Boston Pizza Royalties Income Fund   (BPF.UN) - $26.91
• Cominar REIT (CUF.UN) - $16.91
• iShares 1-5 yr Laddered Canadian Corporate Bond ETF (CBO) - $0.57
• Dream Office REIT   (D.UN)  - $14.00
• Horizons Natural Gas Yield ETF (HNY)  - $8.24
• Killam Properties REIT (KMP.UN) - $  15.60

Total = $268.36

   

    I received a total of $268.36 in dividend income for the month of February 2018.  This represents a 1.945%  increase from 3 months ago and 9.35%  decrease year over year.  

    I received $0.00 from option premiums within my investment accounts in February 2018.

    I will update my dividend income tab with the new amount I will include my option premium income also.  It is great to see money from passive income sources deposited into my brokerage account every single month.

How was your dividend income for February 2018?

Disclosure : Long all securities above.

Photo Credit: www.mipaq,co.za

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.

Portfolio Update - February 2018

 The month of February is now behind us. The markets were wild during the month.  I wish I had money available to invest, but I have a low cash position.  

    

  I had Restaurants Brands International  (QSR.TO) Feb 16 2018 covered call expire as the price of QSR stayed below the strike price of $78.  QSR.TO reported earnings and awarded their shareholders with a 114.3% dividend increase.  That huge dividend increase is not a typo.  QSR.TO pays their dividends in US dollars, which are converted to CDN dollars on the investing tab spreadsheet.

  Four  companies that I owned have decided to raise their dividends.  CIBC (CM.TO) and Killam Properties REIT (KMP.UN.TO) raised their dividend and distribution, respectively. Bank of Nova Scotia (BNS.TO) awarded shareholders with a dividend increase.   Bell Canada Enterprises (BCE.TO) awarded investors with a dividend increase, which you can read about here.

   A position that I have owned since 2014 has not had a dividend in a few years.  In fact, I only received one dividend payment during the time I owned it.  I decided to sell my position in Bombardier Inc Class B shares (BBD.B.TO). Bombardier Inc received a $372.5 million loan from the federal liberal government in early 2017 while the company struggled.  BBD.B recently won a case in which the US would not be allowed to charge duties at around 300% on planes they sell to US companies.  The case came about as BOEING believe Bombardier was selling Bombardier aircraft at lower that normal costs to US buyers.

   Although BBD.B stock price has risen to about $4.00 a share, I believe my money would be better invested elsewhere. 

    There was no option trades initiated during the month of February. 

Shares Purchased Via DRIP

1 unit of  CUF.UN.TO @ $13.87918 for a total cost of $13.88 (TFSA)

0.406 shares of ENB.TO @ $41.43 for a total cost of  $16.80 (Transfer Agent) 

Cominar REIT  (CUF.UN.TO) pays a monthly distribution on or near the 15th of every month.  The only exception is in the month of December.  November's distrubition is paid on or near the December 15 and the December distribution is paid on the last business day of December.  Therefore, there is no distribution payment in the middle of January.   

As of  Mar 3 2018, the value of the portfolio is $105117.67.   This is a 0.386% decrease  over last month's total.  The spreadsheet he investment tab above has been updated.

Disclosure:  Long CUF.UN, QSR.TO, BNS.TO, BCE.TO, CM.TO, KMP.UN.TO

Please Note:  All stocks are from the Toronto Stock Exchange except TTR which trades on the Venture Exchange.

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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.