Trade Update

This past month I sold a naked put in Roger's Communications Class B (RCI.B). The strike price was $42.00 and the premium I received was $68.00 before commissions. The premium was $57.0 after commissions. The expiry date was July 19, 2014. You can read about that here.

The option expired worthless, as RCI.B closed at $42.07 on Saturday July 19. I first entered this position on July 8, 2014.

Total Profit = $57.05

I can calculate my Return on Capital, or ROC, which is the ratio of the maximum potential profit (for a short position) to the amount of total capital used for that position. The total amount of capital used is approximately 20% of my break even. The break even for options is Strike price minus the Premium  This money is tied up while this trade is on.


Strike Price = $42.00
Premium = $57.05 after commissions
Break Even = $42.00*100-$57.05 = $4142.95

ROC= $57.05 / (0.20*$4142.95) = 6.89% 

This ROC is for 11 days. 

Annualized ROC = 6.89%*365.25/11
                             = 228.78%

The amount of capital required is less for an option than for a stock. If I was to purchase 100 shares of RCI.B at $42.00, the amount of capital required would be approximately $2100.00. So with selling the naked put option, my ROC is higher as less capital is tied up.

Disclosure : Long RCI.B

Image Credit : www.techvibes.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

  

Tim Hortons - Minor Company Review

    Tim Hortons opened it first restaurant in 1964.  The site of the first Tim Horton's was in an old gas station as shown in the image below. It served coffee and donuts. The store is named after it founder, Tim Horton. Tim Horton played NHL hockey for the Toronto Maple Leafs. During the 1960s, NHL players were not making a lot of money relative to other jobs like nowadays. Tim Horton started a coffee and donut shop to make extra money.

Cortesy of Tim Horton's Online Annual Report - The first Restaurant

      In 2014, Tim Hortons celebrated it 50 year in business, which all started in the first restaurant above in Hamilton, Ontario. Tim Horton died in a car crash in 1974, but he partnered with a guy named Ron Joyce  early on in the business in 1967. Ron Joyce continued to building the company one restaurant at a time.

Some important mile stones for Tim Hortons.

• In 1984, the first US restaurant opened in Tonawanda, New York.
• 1991, 500th Canadian restaurant opened in Aylmer, Quebec.
• 1995- Tim Horton's is purchased by Wendy's International Inc.
• 2000 - 2000th restaurant opens in Toronto, Ontario.
• 2006 Tim Hortons is completely spun off from Wendy's International and completes an IPO 

  
Some stats on the company as per Yahoo Finance Key Statistics as of July 22, 2014.
                                                          

Market Cap (intraday)	8.06B
Enterprise Value (2014-07-23)	9.28B
Trailing P/E (ttm ; intraday)	20.50
Forward P/E (FYE 2015-12-29)	16.59
PEG Ratio (5 yr expected)	1.92
Price/Sales (ttm)	2.43
Price/Book (mrq)	15.67

       Tim Horton's current pays a dividend of $1.28 CDN annually. At today's share price, this represents a yield of near 2%. Over the last couple of years, Tim Hortons has been under pressure from activist shareholders who want investors to be rewarded with larger dividends. Th. e most recent dividend raise was 23%. Tim Hortons revamps its menu from time to time to compete with their main competitors. The main competitors are McDonald's and Starbucks. Currently, 8 out of every 10 cups of coffee is sold at Tim Hortons.

Conclusion: I believe this company will continue to do well over time. When you go to a Tim Horton's restaurant or through the drive thru, there are usually large lines of people or a lot of people sitting in their restaurants. These long line ups represent and ever increasing revenue stream day after day. The dividend is likely to increase, which will mean my money will be working harder for me year after year.

I currently own this in my margin account.
Disclosure: Long THI


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

  

Week End Reading - July 12

 

The work week has come to an end for the most of us this past Friday.  It is also a time for catch up on some reading of posts from fellow bloggers.

Liquid Independence posted and article about the Richest Canadians People or Families.  It is interesting to see the percentage of how much their wealth grew.

Dividend Mantra recently published a post on Why Dividend Growth Investing is a Good Strategy.  In this post, that Dividend Mantra talks about things such as Dividend Growth Investing is more passive then other forms of income such as rental properties.  Although there is research that has to be done up front, there is little work to be done after the initial purchase. The investor will have to pay attention to news on the company and listen to conference calls roughly every 3 months.

Pulling Ourselves Up Financially posted a monthly update for June 2014. 

 

Dividend Stock Fish (DSF) recently posted about the Risky Assets : Captain of the Titanic. Investors have to pay attention to the news regarding their companies they are currently investing in.  Investors need to have adequate cash on hand to take advantage of opportunities when they arise.  Investors can also put on hedging strategies as insurance to reduce their losses or protect their money.

Photo Credit : www.cafepress.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 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