Recent Trade

On June 21, 2014, My naked put on RCI.B at $44.00 strike price was assigned. You can read about that trade here.  Since them, I tried to write a cover call but the limit order did not go through. 

Recently, I decided to place another limit order with a premium of  $0.68 for a put option on Roger's Communications.   This was  a 2nd "sell to open"  put option, which means if the order goes through I am paid a premium.  Since 1 contract represents 100 shares, I was paid $57.05 after commissions. I am paid a premium as I make a  "promise" that I will buy 100 shares of RCI.B at the strike price of $42.00 if the stock price falls below $42.00 and it is assigned.

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3 possible outcomes :

            (1) If the stock goes up,  I made $57.05 without putting up any money.

            (2) If the stock goes sideways and the stock doesn't fall far enough, I made $57.05.

           (3) If the stock goes down below the strike price of $42.00 and his assigned, then my cost basis is lowered.
                 

What is my adjusted cost base if put is assigned?

ACB= # of contracts*100 shares*strike price - [option premium - option premium commission]   +commission for option being assigned.
                                  = 1*100*$42.00 -[$68.00 -$10.95]+$24.95
                                  =$4167.90

RCI.B currently pays an annual dividend of $1.83/share.   YoC=1.83/41.6790=4.391%

How is this different if I bought the shares outright without an option?
     Cost of 100 shares  =$4200
     Commission = $4.95
     ACB/share =  $42.05
     YoC=   1.83/42.05 = 4.352%

The yield on cost is greater where a put was sold and assigned over just buying the stock outright. This means my money is now working harder for me. Selling a put option allows me to get paid while I am waiting for the price of a stock to go down to a point that I am comfortable buying it.  The other option is to put in a limit order to buy the stock at $42.00 and wait.

NOTE:  Selling puts is deemed to be risky, as the stock can go to zero or decrease in value really quick.


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 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 - June 2014

 The month of June 2014 is another month of increasing dividend income. 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 Account

• Killam Properties (KMP)  - $5.75
• Shaw Communications (SJR.B)    - $18.33
• Just Energy (JE) - $47.88
• Enerplus (ERF)  -$ 45.63
• Enbridge (ENB) - $2.41 
• Tim Hortons (THI) - $32.00

TFSA

• Killam Properties (KMP) - $  14.05
• Dundee REIT   (D.UN)  - $ 16.61
• Cominar REIT (C.UN) - $5.28
• Boston Pizza  Royalties Fund (BPF.UN)   - $23.87
• Enbridge (ENB) - $11.55

Total = $223.36

This total represents a 0.152% increase from 3 months ago and 27.21%  year over year.  This is a small increase from 3 months ago that was due to DRIP.

I also received another distribution payment of $56.00 for my swing trade in Dundee REIT in my non-registered account. This is not listed above since it is a trade, so I keep the money in the account and do not pay myself first with this payment. I have received $651.47 in distributions so far on this trade.

I will update my dividend income tab with the new amount.

Disclosure : Long all securities above and all stocks were purchased on the TSX in Toronto, Canada.

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 June 2014

We have witnessed another "positive" month for the markets. The stock market keeps going higher and higher and it is getting more difficult to find stocks trading at reasonable prices.

During the month of June, the S&P 500 is up 3.27% from May 2014 to July 02, 2014. During the same time, the S&P TSX Composite Index in Toronto is up 3.755.

Account Activity: 

The following stocks were DRIPPED:
Killam Properties   1 share @$10.49
Just Energy     7 shares @$6.09
Enbridge   0.048 shares @ $50.21

I recently sold a naked put in Roger's Communications Class B stock.  The put was assigned on June 21, 2014. I now hold 100 shares of this stock, RCI.B.  I also had bought 6 contracts on Jun 21,2014 Royal Bank Put Option at $74.00 strike price. I lost money on the Royal Bank Put Option. You can read about these 2 trades here.

I have updated my portfolio spreadsheet in the tab above. The current value of the portfolio is $70523.69 as of July 2.  This is an increase of 4.055% from last month. I will take this increase all though I would prefer the market to go down, so it would be easier to choose which stocks to buy.


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