The Money Tree

Safely Generating Income in Retirement

Posts Tagged ‘O’

August Month-end Wrap Up

Posted by mounddweller on August 23, 2009

Well, what a month!  Almost everything in my CC/NP was called away, including my position in FRX which had been open for over 6 months.  Below is a quick recap of what transpired this month.

FRX – As I mentioned above, after 7 months of selling CC and NP on FRX I finally had the stock called away from me.  I originally entered this position in January at $25.60/share.  Over the months I had additional shares put to me at $22.50.  In addition, I sold CCs almost every month.  The end result was a total return of 18.51%, or 30.56% annualized.

GME – Sold ITM calls and OTM puts last month.  Despite the sell-off after they announced earnings I still ended up in the ‘sweet spot’  having my calls assigned and my puts expire worthless.  My one-month return was 5.37%, or 56.03% annnualized.

IPI, O, and TK – Sold NPs on these stocks.  All expired worthless.  My one-month returns were 2.1%, 2.31%, and 1.8% respectively.

My only remaining open position is my NP position in UNG.  For a description of what transpired with it see my post from earlier this evening.

I’ll be back shortly with another post regarding what new trades look intersting for the week ahead.

Regards,

Troy

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New NP Trade – O

Posted by mounddweller on July 2, 2009

I have executed yet another NP trade.  Anyone reviewing my trading history in 2009 will find I have been almost exclusively selling NPs this year.  As a matter of fact I’ve only executed one new CC trade in 2009.  To be quite honest, I’m not sure why that is the case.  It’s not for lack of trying.  I run my VISIONS Scout screener every week looking for great CC trades.

Anyway, like I mentioned above I did execute a new NP trade today.  I sold the AUG O $20 puts for $0.50.  My ROIC on this trade is 2.50%. 

Now that I’ve explained what I did let me tell you why I did it.  My reasons for executing this trade is similar to that of my recent NP trade in TK.  I want to own O, Realty Income Corp long-term.  Realty Income Corp is a REIT engaged in the acquisition and ownership of commercial retail real estate properties in the United States. The company leases its retail properties primarily to regional and national retail chain store operators.  It pays dividends monthly.  In fact the company has declared 468 consecutive common stock monthly dividends throughout its 40-year operating history and increased the dividend 54 times since Realty Income’s listing on the New York Stock Exchange in 1994.  Annualized the current dividend is $1.7085.  If assigned at $20 my initial dividend yield will be 8.54%. 

My objective in owning O and TK (as well as some high yield MLPs) is to build a portfolio of stable business which are able to consistently grow their dividends.  By reinvesting those dividends from now until when I retire I plan to have a substantial income stream to supplement my CC/NP trading income.  In the interim I can also generate additional income by selling CCs on these positions as I accumulate shares.

Below is the price chart for O.  You’ll immediately notice this is NOT a good short-term trading candidate based on Ron Groenke’s criteria.  I would not recommend this trade to anyone unless (like me) you intend to hold it for a very long time.  My plan is to sell additional NPs over time if the price continues to fall.  For example, if O trades for less than $20 and the stock is put to me, I’ll probably sell additional NPs at the $17.50 strike price or lower until I have accumulated the total number of shares that I’d like to own.

VISIONS - O price chart

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