The Money Tree

Safely Generating Income in Retirement

Posts Tagged ‘GTY’

Portfolio Update – GTY / HGT

Posted by mounddweller on July 16, 2011

Fellow Traders,

I want to update you on a couple of my open trades.  Both of these trades employ a different strategy than either my Deep OTM NP or regular NP/CC trades.  This strategy involves buying high yield stocks and selling CCs against the shares in addition to collecting the monthly or quarterly dividends.

First let’s look at Getty Realty Corp. (GTY).  Getty is a real estate investment trust which owns gas stations on the east coast which they lease to independent operators.  Getty first caught my attention back in March of this year when they had a significant drop in price.  I felt the situation causing the price drop would resolve itself and the stock would subsequently rebound.  I opened the trade by selling NPs.  Since that time I have collected two quarters of dividends and sold two rounds of CCs.  My complete transaction history is below.

In the 4 months I have been holding GTY I have collected $1,680 in premiums and dividends.   With $11,250 in capital at risk that’s a 14.93% return in only 4 months!  Annualized that’s approximately a 45% ROIC.  Not bad for a REIT, huh?  Note this return doesn’t include my substantial unrealized capital gains.

Next up is Hugoton Royalty Trust.  As many of my long-term readers know I have been trading HGT for about 15 months.  I’m on my third round of trading HGT.  In both of the 2 prior rounds my shares were called away when my CCs finished ITM.  Below is the transaction history for my third round of trading in HGT.

In 4 1/2 months in holding HGT I have collected $636.56 in premiums and dividends.  That’s a 5.92% ROIC.  This will only get better as I should receive one more dividend in August prior to the expiration of my covered calls.  My goal in this trade is to achieve a total return of 12-15% annually.

Regards,

Troy

 

Advertisements

Posted in Portfolio Updates | Tagged: , , , | 2 Comments »

MAR Wrap-up and New APR Trades

Posted by mounddweller on March 20, 2011

Fellow Traders,

Like many of you I’ve spent a good portion of this weekend reviewing how I did in March and looking for potential April trades.  Here’s a brief recap of my March activity.  First, my closed trades:

(1) Back on February 4th I sold 4 MRK MAR $31 puts at $0.35.  After commissions I netted $128.03.  These puts expired OTM.

(2) On February 28th I sold 3 RVBD MAR $35 puts at $0.45.  After commissions I netted $123.77.  This was one of my Deep OTM NP Strategy selections.  The puts expired OTM.

Now, onto my trades which remained open.

(1) First Exelon (EXC).  I started this trade almost one year ago, back on April 16th.  My most recent activity includes selling 2 APR $43 calls at $0.90 and then buying them back late last week at $0.30.  Also, earlier this month I sold 3 APR $40 puts at $0.50.  Between selling calls and puts, and the dividends received I have reduced my cost basis from $42.50 to $37.46.

(2) Next up is Hugoton Royalty Trust (HGT).  This is my third trade in HGT.  The first two were very successful.  I initiated this third trade back on March 1st, buying 500 shares of HGT at $21.50.  On March 17th I sold 5 AUG $22.50 calls at $0.80.    The strategy with HGT is to buy the shares, sell calls 4-6 month out, and then collect monthly dividends.

(3) CSCO is my next open position.  Back on February 10th I opened this trade by selling 5 MAR $18 puts at $0.21.  On Friday I rolled these puts out to JUN for a $0.70 net credit.

(4) NOK is up next.  I did a buy/write on them back on March 11th at a net debit of $8.17.  I sold the APR $9 calls. 

(5) My remaining open position is in Getty (GTY).  On March 14th I sold 5 MAR $22.50 puts at $0.55.  These puts expired ITM and thus I will have 500 shares of GTY put to me at $22.50 on Monday morning.  My plan is to sell the JUN $25 calls at $0.75 and collect the $0.48 dividend which will be paid in mid-April.

Now onto my my list of potential trades for April.

Let’s briefly look at each of these.

(1) First up is Gamestop (GME).  You’ll notice I have them listed twice.  That’s because I can’t decide which trade I like better.  I like the ROIC with the $19 put and I have traded GME at this strike price with good results before.  However, I like the $18 strike because there is better support at this price.

 (2) Next is CSCO.  As I mentioned above I am already short 5 contracts at the $18 strike.  This trade expands my position by selling more puts at a much lower strike.

(3) Aflac (AFL) is my next pick.  It has fallen sharply because of the tremendous disaster in Japan where it does a lot of business.  It closed at $50.47 on Friday well off its 52-wk high of $59.54.

(4) JNJ is up next.  I ‘borrowed’ this pick from by investing buddy Teddi over at www.fullyinformed.com.  JNJ is approaching bargain territory so this is a good trade despite the sparcity of DSP.

(5) AT&T (T) is fast approaching their ex-dividend date and is trading at a nice price.  Thus, I’m happy to enter a buy/write trade here and reinitiate a position in T.

(6) Last up is GTY which I discussed up above.  As I said before I intend to sell CCs against the shares I’m acquiring tomorrow.  With a dividend yield in excess of 8% I won’t mind holding this one for awhile.

Best of luck to all my readers out there.  Let me know your thoughts on my trades and I would enjoy hearing what trades you’re considering.

Regards,

Troy

Posted in Portfolio Updates, Potential Trades, Troy's New Picks! | Tagged: , , , , , , , , , , , , | 4 Comments »

GTY – New Trade

Posted by mounddweller on March 14, 2011

Fellow Traders,

I executed the trade I referenced earlier on GTY.   This morning I STO 5 MAR $22.50 puts at $0.55.  My ROIC is 2.44% with only 5 DTE.  If you missed my earlier post with my rationale for this trade you can find it here: https://troysmoneytree.wordpress.com/2011/03/12/nok-new-cc-trade/.  Don’t let the title fool you.  The post starts out talking about my NOK trade but further down you’ll find my thoughts on GTY.

Regards,

Troy

PS.  I held off pulling the trigger on the LO trade.  After giving it a second thought I decided the premium was too high.  That tells me somebody knows something I don’t.  Like my grandpa always used to say…”if something looks too good to be true, it is!”

Posted in Troy's New Picks! | Tagged: , | 2 Comments »

NOK – New CC Trade

Posted by mounddweller on March 12, 2011

Fellow Traders,

Earlier this week I executed a CC trade on NOK.  I bought 500 shares at $8.35 and sold 5 APR $9 calls for $0.17.  This gives me a net cost basis of $8.18.  The 52-wk low is $8.00.   My uncalled ROIC is 2.035% with about 35 DTE.  The called return 10.024%.

As you’re probably aware NOK has been sold and left for dead on Wall Street.  However, being a contrarian (my wife just says I’m contrary), I think Nokia is a good buy at these levels.  I think the down-side risk is minimal and the long-term potential is enormous if their joint venture with MSFT is anywhere near successful.

However, my immediate interest in NOK is more short-term in nature.  NOK generally pays a dividend once per year.   This generally occurs in late April or early May.  While I haven’t been able to find any news releases regarding the amount of the dividend, based on amounts from the past few years I believe it will be around $0.50.  At Friday’s closing price of $8.49 this is a yield of 5.9%. 

I believe buyers, wanting the upcoming dividend, will provide support to the price of NOK.  If this holds true there are two possible outcomes to my trade.   First, NOK could rise and close above $9 at APR expiration.  If this occurs I will miss getting the dividend but will have earned 10% on my money in just 35 days.  I’ll happily forego receipt of the dividend for that kind of return.  Second, the stock may rise or hold steady and my $9 calls will expire worthless.  However, if this occurs I will still own the stock when it goes ex-dividend and will be entitled to the estimated $0.50 dividend.  After the stock goes ex-dividend I can either sell the stock outright or sell another round of MAY or JUN calls.  

I believe a similar scenario can be set-up with one of our Deep OTM NP selections from last week, Getty (GTY).  Here’s a trade I’m considering:

(1) STO GTY MAR $22.50 puts at $0.55 or better.  This is a 2.44% ROIC with only a week to expiration.

(2) If GTY closes below $22.50 I will have the stock put to me at $22.50.  However, GTY has a $0.48 quarterly dividend and goes ex-dividend on 3/31.  Having the stock put to me on 3/21 I will be eligible to receive this dividend.  After 3/31 I can sell an APR $22.50 or $25 call, or I can just sell the stock outright.

(3) If GTY closes above $22.50 on Friday, I get to keep my put premium of $0.55 which equates to an annualized ROIC of 178%.

Again, the key to this trade is that I feel all of the bad news has already been priced into GTY and that it won’t fall much further over the next week or so.  Like NOK, if anything, the upcoming dividend should provide support to the stock price as buyers jump into try to capture the dividend.

Regards,

Troy

Posted in Troy's New Picks! | Tagged: , , , | 5 Comments »

Deep OTM NP Strategy – March Week 2

Posted by mounddweller on March 5, 2011

Fellow Traders,

I don’t have a lot of commentary this week to accompany our weekly picks for the Deep OTM NP Strategy.  Nothing really jumps out at me as a compelling trade.  I will make a few comments about Getty Oil (GTY).  GTY is a Real Estate Investment Trust (REIT) that leases gas stations to operators.  They have over 1,000 locations primarily in the Northeast.  This past week their largest tenant, a subsidiary of the Russion oil company, Lukoil sold their interests to another company which then announced there would be a delay in the March lease payment.  Given the market doesn’t like uncertainty the stock understandably declined precipitously.  The new tenant said it would be making the lease payment on or around March 7th.  That’s Monday.  If the new tenant makes the payment on Monday and the put premium remains high it might be a good trade.  However, I’m not sold on it as a longer term investment.  This new tenant may attempt to reduce the lease rates and thus impact GTY’s ability to maintain its current dividend.

Best of luck to everyone in their trading this week.  Be careful out there.

Regards,

Troy

Posted in Deep OTM NP Strategy | Tagged: , , , , , , , , | 2 Comments »