Tuesday, 9 June 2015

New Purchase - HCP // Options Trade - OHI

On June 9, I followed My Dividend Pipeline's lead and bought more HCP. Actually, I doubled my position and reduced my average cost by over 6%. I'm looking at averaging down on other positions as well.

Number of shares purchased
100
Price per share
$37.10
Commission
$9.95
Total cost per share
$37.20
Total cost
$3,719.95
Annual dividend per share
$2.26
Initial dividend yield
6.08%
Increase in forward 12-month dividends
$226.00


It takes balls to buy REITs and Oil & Gas in today's market, or maybe a vagina:


Anyhow, I finally got my annual dividend income to over $9,000, which would have been a hell of a lot easier had Ensco not cut its dividend.


On June 8, I sold a put in OHI. The trade:

Sold 1 OHI Put Dec 18 '15 $35 Put @ 2.80 ($11.20 commission + $0.01 SEC fee)
Days Held (sell date to expiry): 194
Net Premium: $268.79
Annualized Return = ($268.79 / ($3,500 - $268.79)) * 365/194 = 15.7%

The most likely outcomes of this trade are:

1. Shares are trading above $35.00 at expiration. I will get to keep $268.79 in net premiums.

2. OHI is trading below $35.00 at or before expiration and shares are assigned. I will receive 100 shares of OHI at a net cost of $32.31/share.

4 comments:

  1. I like your use of put options to either make a profit or establish a position at a lower cost basis. Really interesting!

    ReplyDelete
    Replies
    1. I really like selling puts on stocks I wouldn't mind owning. It's a way to make a little extra money, but you got to be careful not to get burned...like what happened to me with ESV. It looked like the same was about to happen with BBL so I rolled that put forward. I've come to view options as gambling as you've got to be lucky to make some serious coin, and it's addictive.

      Thanks for stopping by and good luck.

      Delete
  2. The REITs and many health REITs specifically are making the rounds among the DGI community. I guess it's for good reason as the entire sector has been beaten down tremendously in recent weeks with bond yields rising and Fed interest rate hike chatter scaring many people out of the space. I just added some HCP and VTR recently and am looking at adding more in June if things stay depressed. I also am looking into adding more HCN. Thanks for sharing.

    ReplyDelete
    Replies
    1. I think you're adding at the right time. Sure it could get worse (i.e. prices may continue dropping), but at some point, people will become rational once more. I think an increase of 25 or 50 pts is going to make a very minor impact on REITs. I believe these companies are going to do very well over the next 30 years.

      Delete