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July 22, 2011
Edited: July 22, 2011
Share ThisI've been highly successful selling naked (or cash-secured) puts and as long as it's successful, will continue to do so.
It appears a good time to purchase dividend stocks (or play options on them) is when earnings are reported and, although favorable or decent, the stock for whatever reason goes down for a day or so. I am finding out that , at least on good dividend stocks, the share price will bounce back. It happen to clorix (CLX) awhile back when it reported earnings and it is happening today to Pepsico (PEP) and reynolds (RAI).
In lieu of buying these stocks outright, I'm trying to get them even lower and getting paid to do so. Writing out-of-the-money Puts on these stocks allows one to get an immediate paid premium and one only needs to purchase the stock is the stock drops down to the strike price.
Here's today plays. I do have limit orders on them.
SELL to OPEN... PEP SEPT 62.50 (current PEP price..65.42)
SELL to OPEN... RAI SEPt 34 (current RAI price 36.65)
As you can sell, my strike prices are quite lower than current prices and the current prices are quite lower than they were two days ago for PEP and yesterday for RAI. I could have written higher strikes for higher premiums but I feel quite comfortable with these premiums to pocket some income.
Two previous sell put transactions are INTC and PM. The premiums are just about gone on these and I can get them expire or I can close my position to release cash-secured capital to utilize on other plays.
The INTL AUG 20 premium is now only .03 cents
The PM AUG 62.50 premium is now only .05 cents.
On another note, as I continue my capital preservation with slow income paying growth strategy, I have no dividend payments being paid this week but next week I have four and one on Aug 1.
Since I am holding 17 dividend paying securites, some of which pay quarterly and some of which pay monthly, I currently having 100 separate dividend payments on a yearly basis (13 stocks paying quarterly (13 x 4) and 4 stocks paying monthly (4 x 12). This does not count dividends received on my index ETF and Mutual Fund plays.
