I just closed out my profitable Mattel (MAT) position after holding it for 1 month. As mentioned earlier, I'm trying a new variation of DITM - capturing the annual dividend instead of just the quarterly, securing the payment by writing a call 3-4 months out in case of a dividend play against me.
Nov. 29 -Bot 500 MAT ($25.54) - $12780
Sold 5 April 24 calls - $1051
Closed out Dec.31, (at same stock price),net $224 after commissions, 1.75% for a month, 21% annualized.
Thanks to Harry Domash's sharing a huge list of annual dividend-paying stocks from his excellent Dividend Detective.com website, I have many more to choose from for this plan - laddering 1 a month (12)will get me annualized.
With Sentiment (my other passion) indicating a flat to down nearterm future, I am closing out and not opening positions now - a sharp downdraft is perfect for future DITM investing: lower stock prices, ergo higher dividend %s, and higher Implied Option Volatility (premium).
A prosperous 2011 to all, starting tomorrow !
Friday, December 31, 2010
Wednesday, December 29, 2010
"STEELING" MONEY:
Latest trade before year-end (and before I wrap up the 2010 results next week: Nucor Steel (NUE) was bought last March at @$45 (200 shares)and 2 $39 calls were sold below it. With a dividend of 3.27%, which grew as the stock 3 months later went into a 37-40 trading range for 5 months. It was called away overnite (ex-dividend was today) at another lower call sold later at $37. So instead of a $5 to 8 loss in the stock, DITM resulted in a 4.55% gain over 9 months, or 6.1% annualized. Not great, but better than a loss!
Wednesday, December 22, 2010
CHRISTMAS GIFT:
Latest position called away the day before its Ex-D : IYR, the Real Estate trust, yielding 3.45% at July's purchase at $52; now at $55 it hss a little less dividend %.
Net return after 5 months after commissions, annualized: 11.1% (if done over a 12-month period).
HHs !
Net return after 5 months after commissions, annualized: 11.1% (if done over a 12-month period).
HHs !
Sunday, December 19, 2010
TOY STORY:
Here is an interesting trade for DITMers - a variation on a variation of covered call writing (or (non)-standard deviation for technicians:
Mattel pays an Annual dividend, not quarterly; many other stocks also do, especially pharmas and foreign stocks (note tax consequences - apparently UK stocks have a no tax agreement with the US).
Still a WIP (work-in-progress), I bought MAT, Mattel the toy company, the end of Nov., just before ex-D, and sold the
April call:I got paid its annual dividend last week. Now my choice is close the trade out now for a SURE 21.4% annualized profit (1.78 X 12months), or hold to milk the small call premium until called away in April at 24 (unless the stock is below 24), for a 12.73% annualized profit, but slightly more $$. Here is the trade:
Bot 500 MAT @ $25.54 $12,779
Sold 5 calls -April 24 for $1051
Received div'd - $415
If called in April at $24, $11,991 -after commission
Net $678, or 5.3% in 5 months. Divide by 5 , then multiply by 12 to annualize:12.73
OR:
Monday, buy calls to close (higher than sold), at $2.55 for $1285, up from $1051
Sell stock at $25.67, also higher, for $12,826; receive $415 div'd - net:$228.
$228 divided by initial stock purchase of $12,779= 1.78%, times 12 months: 21.4%.
Now if I can just find 11 more stocks with annual or semi-annual dividends!!! Feel free to email me if you know if any.
Mattel pays an Annual dividend, not quarterly; many other stocks also do, especially pharmas and foreign stocks (note tax consequences - apparently UK stocks have a no tax agreement with the US).
Still a WIP (work-in-progress), I bought MAT, Mattel the toy company, the end of Nov., just before ex-D, and sold the
April call:I got paid its annual dividend last week. Now my choice is close the trade out now for a SURE 21.4% annualized profit (1.78 X 12months), or hold to milk the small call premium until called away in April at 24 (unless the stock is below 24), for a 12.73% annualized profit, but slightly more $$. Here is the trade:
Bot 500 MAT @ $25.54 $12,779
Sold 5 calls -April 24 for $1051
Received div'd - $415
If called in April at $24, $11,991 -after commission
Net $678, or 5.3% in 5 months. Divide by 5 , then multiply by 12 to annualize:12.73
OR:
Monday, buy calls to close (higher than sold), at $2.55 for $1285, up from $1051
Sell stock at $25.67, also higher, for $12,826; receive $415 div'd - net:$228.
$228 divided by initial stock purchase of $12,779= 1.78%, times 12 months: 21.4%.
Now if I can just find 11 more stocks with annual or semi-annual dividends!!! Feel free to email me if you know if any.
Friday, December 17, 2010
Christmas Bonus:
Twas the week before Christmas and my XLU position got called away the day before the ex-Dividend. The numbers are as follows:
Bought 200 shares exactly a year ago: $6337 (all figures include commissions)
Dividends received: $253; net call premiums (sold and rolled): $672
Stock sale (after $9 commission): $5991
Net profit for a year: $579, or 9.14% annualized, with very little risk or monitoring.
Happy Holidays !!!
Bought 200 shares exactly a year ago: $6337 (all figures include commissions)
Dividends received: $253; net call premiums (sold and rolled): $672
Stock sale (after $9 commission): $5991
Net profit for a year: $579, or 9.14% annualized, with very little risk or monitoring.
Happy Holidays !!!
Wednesday, December 15, 2010
HAPPY HOLIDAYS !!!:
For some reason, this time of year brings a multitude of dividend payments in the DITM accounts, ho ho ho...
After the Holidays I shall "mark to market" the year 2010 - that means on paper close out all positions, buying calls and selling stock at current prices, just to evaluate and exhibit the results.
I'm pleased to report on one position - Exelon Corp., a utility - which I've held for 16 months. This displays what I have believed to be a critical part of DITM - the safety net. On August 7, 2009 I bought 100 shares at $49.87/share. It currently trades at $41, so if I'd just bought the shares I'd be out $900.
During that time I took in $5425 in call premium, dividends, and the sale at $41, if it is called away before the next Feb. ex-D date. So in 18 months I will have received 13.1% - annualized at 8.75%. If it is not called away on an ex-D play, the call will expire in April's expiry date: 20 months with the extra dividend makes the total $709 profit on $4996 initial investment, or 8.5% annualized -not bad for a stock that dropped nearly 20% in price.
After the Holidays I shall "mark to market" the year 2010 - that means on paper close out all positions, buying calls and selling stock at current prices, just to evaluate and exhibit the results.
I'm pleased to report on one position - Exelon Corp., a utility - which I've held for 16 months. This displays what I have believed to be a critical part of DITM - the safety net. On August 7, 2009 I bought 100 shares at $49.87/share. It currently trades at $41, so if I'd just bought the shares I'd be out $900.
During that time I took in $5425 in call premium, dividends, and the sale at $41, if it is called away before the next Feb. ex-D date. So in 18 months I will have received 13.1% - annualized at 8.75%. If it is not called away on an ex-D play, the call will expire in April's expiry date: 20 months with the extra dividend makes the total $709 profit on $4996 initial investment, or 8.5% annualized -not bad for a stock that dropped nearly 20% in price.
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