Investing Pursuits

Saturday, October 11, 2014

Recent Option Trades - Part 2

This is a follow up post on my two recent naked put option trades that I recently did. You can read about the 2 trades here.

For the TD put, there are 3 outcomes.

Option Premium : $82.00
Commission : $10.95
Net Option Received = $71.05

If the stock goes up, I make money with the option premium of $71.05.
If the stock goes sideways, I still make money with the option premium if $71.05

If stock goes down and put is assigned.

Adjusted Cost basis = $56.00*100+$24.95-$71.05
                                 = $5553.90

ACB per share = $55.5390 / per share

Yield = annual dividend rate / ACB = 1.88/55.5390 = 3.385%

Buying the stock with no option
Cost = $5600+$4.95=$5604.95
Yield = annual dividend rate / ACB =$1.88/$56.0495 = 3.354%

I currently do not own this stock, but with the recent chaos in the market this option will likely be assigned as the price of the stock is less than the strike price. I also have the choice to buy back the put for a loss to close the transaction. As is shown above, the yield with the put option is higher than just buying the stock at $56.00. The option assignment fee is $24.95.

For RCI.B put option

Option premium = $70.00
Commission = $10.95
Net Option premium = $59.05

I can make this money regardless if the money goes up, down or sideways.

If stock goes up, I keep the $59.05/
If stock goes sideways, I keep the $59.05.

If the stock goes down:
Adjusted Cost basis = $42.00*100+$24.95-59.05
                                 = $4165.90

ACB per share = $41.6590 / per share

Yield = annual dividend rate / ACB = 1.83/41.6590 = 4.393%

Buying the stock with no option
Cost = 4200+4.95=4204.95
Yield = annual dividend rate / ACB =1.83/42.0495 = 4.352%

I currently own 100 shares of RCI.B, so if this put is assigned it will lower my cost basis for this stock. Currently, RCI.B is trading higher than the strike price so there is a chance the put will not be assigned at expiration.

Note: Selling puts can be risky as the stock can fall a lot in value. As I plan on holding these stocks for the long term, I did not have insurance on these transactions.

Disclosure : Long TD, RCI.B

DISCLAIMER:

Friday, October 3, 2014

Dividend Income - September 2014

The month of September 2014 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 Account

Killam Properties (KMP) - $5.75
Shaw Communications (SJR.B) - $18.33
Enerplus (ERF) -$ 45.63
Just Energy (JE) - $86.38
Tim Horton's (THI) 's $32.00
Enbridge (ENB) - $2.43

TFSA

Killam Properties (KMP) - $ 14.20
Dundee REIT (D.UN) - $ 16.61
Cominar REIT (C.UN) - $5.39
Boston Pizza Royalties Fund (BPF.UN) - $23.87
Enbridge (ENB) - $11.55
Claymore 1-5 yr Laddered Corporate Bond ETF (CBO) - $0.73

Total = $262.87

This total represents a 17.69% increase from 3 months ago and 48.05% increase year over year. Just Energy used to pay a monthly dividend. It was since reduced the dividend and switched to a quarterly dividend. This past month of September was the first time they paid there dividend quarterly. Some of my stocks I DRIP, so these companies paid slightly larger amount of dividends than before.

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 $819.47 in distributions so far on this trade.

Another form of income I received was in the form of option premiums. I sold put options in Rogers Communications Class B stock and TD Bank. The net premium paid from these two put options is $130.10.

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

Disclosure : Long all securities above.

Photo Credit: www.mipaq,co.za

DISCLAIMER:

Thursday, October 2, 2014

Portfolio Update - September 2014

The month of Sept 2014 is now behind us. The stock market keeps shown a bit of a pullback. The TSX composite index is down 5.50% over the last month as compared to the S&P 500 which was down going higher and the S&P 500 which decreased 2.81 %. During the month I did a few transactions.


Click to enlarge

I sold my shares in Tim Horton's Inc after the news of the leveraged buyout by Burger King. Although this acquisition has not occurred as of today, the likelihood of it in the future is very high. I recently wrote a post on this sale. I also purchased shares in Bombardier Inc. Class B stock .

I sold 2 put options this past month of September. The first one was in Toronto Dominion Bank and the second one in Rogers Communications Class B stock. I currently own 100 shares of RCI.B. You can read about these put options here.

I made a small purchase in my TFSA with the small amount of cash that was sitting in the account. I decide to put it too work and took advantage of free commission ETF offered by my broker. I purchased 3 shares of Claymore 1-5 Yr Laddered Corporation Bond ETF on the Toronto Stock Exchange.

I also acquired 1 more share of Killam properties in my TFSA via DRIP at a cost of $10.41. Just Energy paid its first-time quarter dividend at the end of September. I acquired 16 shares at $5.23 of Just Energy though DRIP. Both of these DRIPs lowers my cost basis.

As of Oct 2, 2014, the value of my portfolio stands at $71885.58. This is an decrease of 4.376% over last month.

I have updated my investment account tab above.

Disclosure: Long KMP.TO, CBO.TO, RCI.B.TO, BBD.TO

DISCLAIMER:

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