Thursday, 10 September 2015

New Purchase - Royal Dutch Shell // Options Trade - OHI

On September 4, 2015, I added some shares of RDS.B.


Number of shares purchased
20
Price per share
$49.54
Commission
$9.95
Total cost per share
$50.04
Total cost
$1,000.75
Annual dividend per share
$3.76
Initial dividend yield
7.5%
Increase in forward 12-month dividends
$75.20




Because of low oil prices, Baytex Energy recently eliminated its dividend. This has reduced my yearly dividends, which now stand at $9,159.

On September 10, I sold a put in OHI. The trade:


Sold 1 OHI Put Mar 18 '16 $35 Put @ 4.60 ($11.20 commission + $0.01 SEC Fee)


Days Held (sell date to expiry): 190


Net Premium: $448.79


Annualized Return = ($448.78 / ($3,500 - $448.79)) * 365/190 = 28.3%

The most likely outcomes of this trade are:

1. Shares are trading above $35.00 at expiration. I will get to keep $448.79 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 $30.51/share.