Tuesday, 18 November 2014

Options Trade - BHP Billiton


Today I sold a put option in BBL.

Sold 1 BBL Put Jun 19 '15 $50 Put @ 3.00 ($11.20 commission + $0.01 SEC fee)

Days Held (sell date to expiry): 213
Net Premium: $288.79

Annualized Return = ($288.79 / ($5,000 - $288.79)) * 365/213 = 10.5%

The most likely outcomes of this trade are:
  1. Shares are trading above $50 at expiration. I will get to keep $288.79 in net premiums.
  2. BBL is trading below $50 at or before expiration and shares are assigned. I will receive 100 shares of BBL at a net cost of $47.11/share.

I recently received a dividend from ACN and was surprised that a withholding tax was applied. The company is headquartered in Ireland, and as such, shareholders in relevant territories (Canada being one of them) do not pay DWT. After some reaserch, it appears that I must fillout a form and return it to my broker. 

Wednesday, 12 November 2014

Options Trade - Ensco


Today I sold a put option in ESV.

Sold 1 ESV Put Jan 17 '15 $37 Put @ 1.56 ($11.20 commission + $0.01 SEC fee)

Days Held (sell date to expiry): 66
Net Premium: $144.79

Annualized Return = ($144.79 / ($3,700 - $144.79)) * 365/66 = 22.5%

The most likely outcomes of this trade are:
  1. Shares are trading above $37 at expiration. I will get to keep the $144.79 in net premiums.
  2. ESV is trading below $37 at or before expiration and shares are assigned. I will receive 100 shares of ESV at a net cost of $35.56/share.

In response to a comment received, I calculated my annualized return on my other options too:

SNC-Lavalin

Sold 1 SNC Put Jun 19 '15 $42 @ 2.95 ($11.20 commission)

Days Held (sell date to expiry): 224
Net Premium: $283.80

Annualized Return = ($283.20 / ($4,200 - $283.20)) * 365/224 = 11.8%

General Mills

Sold 1 GIS Put Apr 17 '15 $47.50 @ 1.08 ($11.20 commission + $0.01 SEC fee)

Days Held (sell date to expiry): 158
Net Premium: $96.79

Annualized Return = ($96.79 / ($4,750 - $96.79)) * 365/158 = 4.8%

Monday, 10 November 2014

Options Trade - General Mills


Earlier this week, I sold my very first Put. And today, I sold my second.

I sold puts in SNC-Lavalin and General Mills because their share prices have dropped some. I would have liked to sell puts during the recent short-lived correction, but I was approved for put options trading after the market ‘rebound’.

Today’s options trade:

Sold 1 GIS Put Apr 17 ’15 $47.50 Put @ 1.08 ($11.20 commission + $0.01 SEC fee)

My net premium is $96.79.


The most likely outcomes of this trade are:
  1. Shares are trading above $47.50 at expiration. I will get to keep the $96.79 in net premiums.
  2. GIS is trading below $47.50 at or before expiration and shares are assigned. I will receive 100 shares of GIS at a net cost of $46.53/share.


Thursday, 6 November 2014

Dividend Increases, A Put and New Purchase


I’ve got several items to report on.

First, I transferred my 150 shares of Telus to Computershare and gave 7 of them to my brand new nephew. I have started contributing $100/month to purchase more shares and will be DRIPing the dividends. So I now have 145.47 shares.

On October 28, BP increased its quarterly dividend from $0.585 to $0.60 per quarter, or 2.6%. My YOC is now 5.5%, and my yearly dividends have increased by $13.98. The total dividend increase for 2014 is 5.3%, from $0.57 to $0.60.

On November 6, Telus increased its quarterly dividend from $0.38 to $0.40. This is the first company I own that has increased its 2015 dividend. My YOC is now 4.75% and my yearly dividends have increased by $11.64. Telus has been increasing its dividend twice per year since 2010, so it’s likely that another increase is coming in 6 months time.

After long and arduous discussions with my brokerage firm, and lots of paperwork, my margin account is now approved for naked options trading! It was complicated because my broker does not offer cash secured puts. It’s either naked options or nothing. And to qualify for naked options trading was no easy feat. In the end, I threatened to leave them and voilĂ ! So today I sold my very first naked put option - it’s not really naked because I have plenty of cash on hand.

Shares of SNC-Lavalin were down 8.4% today. I currently hold 250 shares after selling 100 @ $47.58 in December 2013. The CEO is cleaning house after corruption scandals erupted in 2012. I like what he’s doing and wouldn’t mind owning more shares, so I sold the following put:

Nov/06/2015 Sold 1 SNC Jun 19 ’15 $42 Put @ 2.95 ($11.20 commission)

And finally, I initiated a position in Unilever.

Number of shares purchased
100
Price per share
$39.97
Commission
$9.95
Total cost per share
$40.07
Total cost
$4,006.95
Annual dividend per share
$1.50 est.
Initial dividend yield
3.7%
Increase in forward 12-month dividends
$150 est.

My dividend income is now $7,873.15 per year.