RealMoneyIssues
Well-known member
Was this in English??? 
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Dividend paying stocks....
- Thread starter Afishegg
- Start date
On my IRA account:
1. Sold my remaining MSFT Oct 22 put at $.2 shortly after open.
2. Retain covered call option on MSFT expiring on Nov 18 and long position on MSFT.
3. Sold covered calls on MO, PM 2 days ago
4. Sold covered calls this morning on CVX and MCD expiring on Nov 18 while the markets moved up today.
On my non IRA account, I established 2 small positions on:
1. Calendar spreads on MSFT
a. Bought 5 call expiring Jan 2013 at @ $25
b. Sold 5 call expiring on 18 Nov 2011 at $28
For debits of 5 x $3.72 = $1860 before commission
2. Calendar spreads on JPM
a. Bought 2 calls JMP expiring on Jan 2013 at $30
b. Sold 2 calls JMP expring on Nov 18 2011 at $35
For debits of 2 x $6.63 = $1326 before commission
The benefit of calendar spreads is to make profit on the near term leg and keep on selling the next near term contract when the near term leg expires while keeping the long term contract as a cushion. The maximum loss is the premium - the front leg contract sale plus commission. I will let you know how it goes as it develops.
1. Sold my remaining MSFT Oct 22 put at $.2 shortly after open.
2. Retain covered call option on MSFT expiring on Nov 18 and long position on MSFT.
3. Sold covered calls on MO, PM 2 days ago
4. Sold covered calls this morning on CVX and MCD expiring on Nov 18 while the markets moved up today.
On my non IRA account, I established 2 small positions on:
1. Calendar spreads on MSFT
a. Bought 5 call expiring Jan 2013 at @ $25
b. Sold 5 call expiring on 18 Nov 2011 at $28
For debits of 5 x $3.72 = $1860 before commission
2. Calendar spreads on JPM
a. Bought 2 calls JMP expiring on Jan 2013 at $30
b. Sold 2 calls JMP expring on Nov 18 2011 at $35
For debits of 2 x $6.63 = $1326 before commission
The benefit of calendar spreads is to make profit on the near term leg and keep on selling the next near term contract when the near term leg expires while keeping the long term contract as a cushion. The maximum loss is the premium - the front leg contract sale plus commission. I will let you know how it goes as it develops.
In my IRA account:
MSFT earnings met the expectation and the stock did not drop dramatically after the market closed like AAPL earlier. My remaining 1/2 of protected put option is expiring today so I will close this position for whatever price that I could get today while I am still holding 2000 shares MSFT waiting for dividend payout on Nov 15.
In my non IRA account:
Today I will try to place some small calendar call options and bull put spread options orders in my day trade account. I know the basic option strategy such as covered calls and puts very well but I have to admit that I am new to the more advance options strategies such as spreads. The beauty of spreads is that the maximum gain and lost can be projected within a specific time and it is dynamic during the course of the contract duration. I believe there may be a year-end rally this year so I am bullish for the next two months at least. Here are two stocks that I am looking at for actions toward the bullish side.
1. MSFT - rationale: earnings announcement was fine and the stock price should be pretty stable near term
2. JPM - rationale: financial sector began to bounce back from the recent low. JPM in my opinion is the best in the sector so I will focus on this stock
Again, I am not a financial advisor or market analyst, this is only my own opinion and I just want to experiment some strategies that may work for me to generate profits as part of my on-the-training.
MSFT earnings met the expectation and the stock did not drop dramatically after the market closed like AAPL earlier. My remaining 1/2 of protected put option is expiring today so I will close this position for whatever price that I could get today while I am still holding 2000 shares MSFT waiting for dividend payout on Nov 15.
In my non IRA account:
Today I will try to place some small calendar call options and bull put spread options orders in my day trade account. I know the basic option strategy such as covered calls and puts very well but I have to admit that I am new to the more advance options strategies such as spreads. The beauty of spreads is that the maximum gain and lost can be projected within a specific time and it is dynamic during the course of the contract duration. I believe there may be a year-end rally this year so I am bullish for the next two months at least. Here are two stocks that I am looking at for actions toward the bullish side.
1. MSFT - rationale: earnings announcement was fine and the stock price should be pretty stable near term
2. JPM - rationale: financial sector began to bounce back from the recent low. JPM in my opinion is the best in the sector so I will focus on this stock
Again, I am not a financial advisor or market analyst, this is only my own opinion and I just want to experiment some strategies that may work for me to generate profits as part of my on-the-training.
MSFT is trading around $26.6 now which is below yesterday closed at around $27.13 . I took this chance to sell 10 puts at $.75 to cover the cost of my put options yesterday at $540 and leave 10 puts for hedging for the earnings announcement at the market close today.
In my IRA account:
I bought 20 puts options of MSFT at strike price of $27 for $.27 each ($540 in total) expiring Oct 21 (Friday) to protect my 2000 shares of MSFT because it is scheduled for earnings announcement tomorrow. Not sure if it is good or not, just want to protect it using about 1/2 of the premium from the covered options I sold earlier. (Rationale: Apple's unexpected poor earning announcement today and the stock drops about 5% as of now).
Abbott Labs announced to split the company into 2 this morning, the news was able to move the price more than $2. I sold 3 covered calls with strike price at $55 which I bought 380 shares at $52.56 last week for $1.12 expiring on Nov 19. So I locked in the profits about $300 for now.
I bought 20 puts options of MSFT at strike price of $27 for $.27 each ($540 in total) expiring Oct 21 (Friday) to protect my 2000 shares of MSFT because it is scheduled for earnings announcement tomorrow. Not sure if it is good or not, just want to protect it using about 1/2 of the premium from the covered options I sold earlier. (Rationale: Apple's unexpected poor earning announcement today and the stock drops about 5% as of now).
Abbott Labs announced to split the company into 2 this morning, the news was able to move the price more than $2. I sold 3 covered calls with strike price at $55 which I bought 380 shares at $52.56 last week for $1.12 expiring on Nov 19. So I locked in the profits about $300 for now.
I don't have IB account but just recently transferred most of my TSP fund to Schwab IRA account with cover options feature. The last 2 days I'd committed 100% in stocks on this account with combined average of 4.5% dividend and one covered call option with MSFT.
As for my non IRA margin account, I just sent a check to Traderstation for my day trade, swing trade and position trade purpose. Commission is $1 per 100 shares for the first 500 shares and $.006 each share thereafter. Not sure how well I would do with this account but I guess this is my on-the-job training as new equity trader and I will try my best.
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Our strategies may be different, but the goal is the same. I am happy with average of 4% dividend income with growth of 3 - 4 % without margin in the IRA account. This way I would sleep better at night. With my non IRA margin account, I am not sure what I will do ... day trade, swing trade or position trade ... I will find out ...
alevin
Well-known member
Thanks for the lesson on covered calls in IRA. wasn't sure that could be done. Taking notes for future reference-not ready now. Will be interested to hear your experience with IB, was looking at them with idea of having better access to foreign stocks, got the idea they are somehow more difficult to use than some of the others. After I learned Scottrade has reasonable access to foreign, I decided to go with them instead for new wading-pool venture (non-IRA-but using $ saved up so far for 2012 Roth).
I heard about the danger of the margin account with margin calls and I will be dancing with the sharks on the big stage pretty soon. I will let you know how I do.
If MSFT gets call away on Nov 18, I am ok with that because I would have collected the $1040 option money, $400 dividend and $2000 profits (from $27 to $28). It is all done within about 36 days or so for returns of 6.3%. If MSFT doesn't hit $28 by then, I will write another call for December and I will just keep on writing it as long as I own the stock. Meanwhile, I will continue to collect $400 dividend each quarter and it is to be reinvested. It looks good on paper at least.
If MSFT gets call away on Nov 18, I am ok with that because I would have collected the $1040 option money, $400 dividend and $2000 profits (from $27 to $28). It is all done within about 36 days or so for returns of 6.3%. If MSFT doesn't hit $28 by then, I will write another call for December and I will just keep on writing it as long as I own the stock. Meanwhile, I will continue to collect $400 dividend each quarter and it is to be reinvested. It looks good on paper at least.
Birchtree
Well-known member
Welcome to the shark tank when you go on margin - remember your interest costs are tax deductable as an incentive to assume risk with your capital. With this current bull run you can most likely kiss your MSFT goodbye - someone will call it away - not worth the extra risk.
That's why I didn't open the margin account with Interactive Brokerage (IB) even they offer it. As far as I know, this is the only brokerage firm that offers margin IRA and I believe IB is a British owned company. That may be the reason that no other US companies can offer it.
With the new IRA account, all my stocks will be dividend reinvested but I will pick a few stocks for covered call options to generate residual income. For example, today I wrote a covered call for MSFT with strike price at 28 for $.52 expiring on Nov 18. I have 2000 shares so I can write 20 calls to generate $1040 before commission. My average purchase cost was $27 which I bought yesterday with my new TSP transferred money so it would lower my purchase price to around $26.48. Also Nov 15 is an ex-dividend date for MSFT so I will collect another quarterly dividend pay out of $400. I will see how MSFT will do toward Nov 18.
BTW, I just created a margin account (non IRA) with Tradestation specifically for serious short term trading from this account and I guess this is how I will spend my time as retiree for now.
With the new IRA account, all my stocks will be dividend reinvested but I will pick a few stocks for covered call options to generate residual income. For example, today I wrote a covered call for MSFT with strike price at 28 for $.52 expiring on Nov 18. I have 2000 shares so I can write 20 calls to generate $1040 before commission. My average purchase cost was $27 which I bought yesterday with my new TSP transferred money so it would lower my purchase price to around $26.48. Also Nov 15 is an ex-dividend date for MSFT so I will collect another quarterly dividend pay out of $400. I will see how MSFT will do toward Nov 18.
BTW, I just created a margin account (non IRA) with Tradestation specifically for serious short term trading from this account and I guess this is how I will spend my time as retiree for now.
I just confirmed that it is the IRS that prohibits margin in IRA accounts. Isn't that special. It seems overreaching for the IRS to be able tell us what we can and can't do in our own accounts. Shouldn't they (my ex-employer) just worry about collecting the taxes owed on the account?
Oh well. I guess we're stuck with this silly 3-day settlement rule to avoid "free rides". It's funny how we have the opposite problem in our TSP accounts:
In our TSP we can sell at any time. In an IRA you can buy any time, but you can only sell if you've held the position for 3 days - assuming you bought that position using the proceeds from a prior sale within 3 days.
So many obstacles, so little time.
I have avoided options in my IRA, but I wish they would allow margin in IRA's, just so we could short stocks. I don't know if this is a NASD thing or if it's just Scottrade that doesn't allow it.
Good luck!
I just finished buying all the stocks from my buy list for my IRA account. Here are 12 positions out of the 32 stocks in my portfolio:
ABT, AGG, COP, CVX, ED, IEF, JNJ, KO, MCD, MO, MSFT, and NLY. The entire portfolio will generate combined returns of about 4.5% annually and all dividends will be reinvested.
Also, I will write some call options to generate extra income from stocks such as MSFT. One good thing about MSFT is that it has weekly options so I can keep writing out-of-money (OTM) calls every week if it falls in the right price range. If MSFT drops below my purchase price, I just sit there and collect my 3% dividend annually.
BTW, I just requested Schwab to activate my option feature for my IRA account and I hope it works as planned.
Ocean
ABT, AGG, COP, CVX, ED, IEF, JNJ, KO, MCD, MO, MSFT, and NLY. The entire portfolio will generate combined returns of about 4.5% annually and all dividends will be reinvested.
Also, I will write some call options to generate extra income from stocks such as MSFT. One good thing about MSFT is that it has weekly options so I can keep writing out-of-money (OTM) calls every week if it falls in the right price range. If MSFT drops below my purchase price, I just sit there and collect my 3% dividend annually.
BTW, I just requested Schwab to activate my option feature for my IRA account and I hope it works as planned.
Ocean
Fish,
The key point for dividend play is to reinvest the dividend back into the same stock every time it pays dividend. There is no commission for dividend stock purchase for most participating brokerage firms. You will see the difference down the road even when you start out small. I believe this is how it works for Birchtree's oceanic account. Scout gave you a very good link related to this area.
Mista,
I have Schwab and commission is $8.95 per trade and they have Schwab bank for fee checking and free (rebate) ATM withdrawal from any bank. I'm pretty happy with their service.
Ocean
The key point for dividend play is to reinvest the dividend back into the same stock every time it pays dividend. There is no commission for dividend stock purchase for most participating brokerage firms. You will see the difference down the road even when you start out small. I believe this is how it works for Birchtree's oceanic account. Scout gave you a very good link related to this area.
Mista,
I have Schwab and commission is $8.95 per trade and they have Schwab bank for fee checking and free (rebate) ATM withdrawal from any bank. I'm pretty happy with their service.
Ocean
Fish, Try this list from MF. http://www.fool.com/investing/dividends-income/2010/12/23/the-best-dividend-stocks-of-2011.aspx
Fish, Every stock is different. Some pay no dividends, some pay low yields, some pay higher. No guarantees they will continue paying what they have in the past. Generally, the higher the yields the higher the risk. Suggest doing a little research. Advisers such as the Motley Fool usually will list their top ten dividend paying stocks. Utility stocks such as Southern Company, etc. usually pay in the 4-5% range and are fairly consistent in good times and bad. Probably wouldn't want to put all your eggs in one industry basket. When you get more comfortable with your investing you may want to look at REITS such as Annaly Cap. (NLY) which is paying around 15% right now but is a higher risk investment because it is very interest sensitive. Also, a lot of dividend paying companies have dividend reinvestment plans which purchase additional shares at no or very low fees. Good Investing!
Mista_Magee
Member
The first 20 trades in a year are $7, doesn't matter if online or "live" person. After 20 trades even online it's something like $30. For much larger accounts, the cost goes down.
