Jan 2014

Well, a little late, but better than never.

January definetly proved to be an interesting month, with the market dipping 5-7%, a lot of the options premiums became less appealing as my buy in prices and the actual stock prices seemed to be continually be moving apart, ha.  At any rate, just pushed some options out a little longer than I typically do to collect at least some premiums, and put those earnings back into my accounts, is essence doubling down a little and lowering some cost basis on stocks I like (VZ and F).

So Jan didn't end up to be the hot start I was hoping for, but Feb is looking to be better (half a month in now since I'm late on this post), the market is going back up and both VZ and F pay dividends to start and end the month. 

My totals for Jan were below, for a total of $1625.53 in short gains (options + cap gains from option stocks) not a bad start considering the market, but have some ground to make up for sure if I want to make my goal for the year.
I added two pics at the end that I thought interesting.  Even though the market turned down in Jan, with the dividends and option premiums I received, I was able to "soften" the blow vs the normal market, just another added benefit of using this strategy.

 

 
 

2014 Goals And Rules Of Engagement

After what I consider a pretty successful first full year of options trading, a new year brings a time to look back, tweak things, and set goals and procedures for the next year.

My goal for 2014 is pretty simple, I would like to generate 45K in options/short term capital gains this year.   This will take some smart trading, along with adding additional capital to my account by saving more, but I think it can be done.  I would be very suprised if I'm at 20K by June, but think I can play catch up the second half of the year as that's when the seasonality of my job allows me to stash more cash away.  So there you have it, one singular "goal".  45K or bust.

That being said, I am going to change up my rules of engagement a little bit.  This year I really didn't follow any protocol with my "earnings" from the options.  Some I would simply leave in the account, at other times I would pull out and use as disposable income, there really was no rhyme or reason to what I did with the earnings.  So here is a system I have devised to follow this year.


1.  I will split the money I earn on options that expire worthless 50/50.   50% will stay in the account, and 50% will be pulled into my banking account.   Dividends collected on stocks I own with options on them will for the most part be auto-dripped into additional shares.  The few stocks I own that I don't auto-drip will be split in the 50/50 ratio as well.

2.  From there I will use the 50% of the money transfered to my bank to pay off whatever debt I would like to target. I currently have a balance on a credit card I would like to clear up (gets close then I seem to put another purchase on it), a new car payment, and the ever present college loans.  Applying this extra income to those balances should accelerate the payment pay off schedule, and hopefully get the credit card and the car (almost) paid off by the end of the year.

3. The other 50% I will tally at the end of the month, and initiate a monthly purchase into a dividend growth stock I may own already or start a new position in a stock I want to own (in the TradeKing account I am trying to actively grow), thus generating more income with a potential for capital growth.

By following these steps, I will be paying down debt as well as investing for the future at the same time, and I think this could be a very efficient strategy.  It will add a little more book keeping on my end at the end of each month, but I think as I see the balances go down on the few debts I do have, it will keep the motivation up.

So there you have it, my game plan, and now that it is written down, it's just a matter of following the steps every week the options (hopefully) expire worthless.  Let the games begin!!

December 2013 Options

Happy Holidays Everyone,

December proved to be an interesting month to say the least, but it goes to show how options can still help out in adversity.

CSCO and F both had a rough month on revised guidance, each having a modest drop over the course of a couple of days.  Being that I have a larger portion in both, the cov'd calls at the strike prices I want to be above were not as lucrative as when the price of the stock is closer.  (Ie around 22.50 for CSCO  (which now has risen back) and F in the 16.75 range).  That being said I had to sell some longer running cov'd calls so my monthly total wasn't as high as it could be (they will be expiring in Jan) but I still managed to make $1393.26 of profit.

SWHC also had a strong month, which is normally a good thing, but I was in a $13 Dec 23rd covered call, with my stock avg cost of $13.55.  So even after the .30c premium on that one, I took a couple hundred dollar hit when I had to sell them with .25c loss per share (1200 shares)

                                                  

So that brings my total for 2013 to $33,790 (aprrox) of profit on options (short term).   I am pretty excited/pleased with that as this is my first true year of doing them.  I made many, many less "rookie" trades (ahem mistakes) this year, than when I started in mid 2012, and now that I have a comfort level with what I'm doing, I'm looking very forward to many years of success and increasing yearly totals.

2014 looks to be a great year and I have some goals as well as new guidelines I am going to post about, but that will be after the new year.   Enjoy the New Years celebration and we'll catch you in 2014.

Nov 2013 Options

November was quite a busy month, with 5 Fridays in the month it meant an extra week of weekly option trading, even if Thanksgiving week was included in there.

For Nov, I was able to generate $2972.58 in total option income, which I'm very pleased with.  Was hoping to break the $3K mark, but that is a number that I'm sure will be hit in the future.  Overall the options, along with some of the short term capital gain I saw from the options (Citigroup -C, in particular), it turned out to be a very profitable month.  As indicated by purple, I kept ALL option earnings in the accounts for the month. (Didn't take any as profit to use)

Including my Nov options income, my yearly total from options (short term) so far is: $32,667.00.  The options, along with the short term capital gains from the stocks made Nov a $4724.00 total profit month.

Here's hoping that December will be just as successful, until then Happy Holidays!

October Options Total

October turned out to be a roller coaster month and I didn't get as much income as I was hoping to secure.  Got a few strike prices below on some of my positions early in the month when the markets dipped (low premiums for the strike prices I needed to be at to prevent a capital loss if sold), only to finish strong with some nice call and put premiums as the markets closed out Oct on a run.  My total for Oct was $1335.00 in option income.

The $1335.00 in Oct brings my 2013 options total income from all accounts to $27,943.00 (est) for the year so far.

I will be able to add more capital to my dividend holdings in the next week or so (which in turn will be more margin for option stocks), as well as getting some dividend payouts on stocks thats I'm using solely for options (VZ and T), so I'm expecting Novembers total return to be much higher.  Should be my most lucrative month since starting this strategy and I'm looking forward to seeing how it plays out.

Sept Options Total

September's earnings were down due to a few reasons.  I decided to change my strategy a little (feeling the market would uptick) and go for a little more capital gains at the cost of juicier premiums (ie going next price up for a lower premium in hoping to catch the stock price rising), I have had mixed results so far doing this. I think in October I'm going to go back and try and get as little capital gains in exchange for better premiums, and see how much option income I can generate (without losing profit by selling below avg price points obviously). 

So for Sept, total income looked like this:

 

 

 

We'll see if we can get back above the $2K mark for next month. 

 

-The Dividend Addict

 

 



Jan 2012 Options

Review of all my options for the month of Jan.  For the month I brought in $2872.00 of passive income from stocks I already own and/or using margin to cover puts on stocks I'm waiting for the price to come down on.

2012 Q4 Dividend Total

Q4 continued the trend of 8 quarters of continued dividend growth for me.  During the last 3 months, I had 4 stocks increase their dividend (noted by white cell).  My 2011 Q4 dividend total was $122.05, so as you can see the $393.51 collected last quarter was quite a jump.  New capital and the corresponding stock purchases and dripped returns all played a part in the increased rate of dividend return.  Looking forward to seeing what the Q1 total will look like.

1/14/2013 Weekly Options

 

Here are my weekly option trades for this week:

Results:

BAC calls:
With BAC price dropping last week, the $12 calls expired worthless so that is money kept.  I am still very bullish on BAC, so any dip in capital is not too concerning for me.  The biggest decision to be made tomorrow is to resell these at $12 or go for a $11.50 call to colllect more profit for the week.  Will have to see how the market opens tomorrow and decide.

F puts:
F made it interesting on Friday, hovering at $14, but in the end these expired worthless as well, so profit taken.  I'm also very bullish long term on F, so even if assigned I wouldn't have been concerned.

BAC puts:
Took somewhat of a gamble and were assigned these.  I will definitely sell $11.50 weekly calls on these tomorrow.  Entry price point for these 500 shares is $11.31.

1/7/2013 Weekly Options Trades

Going to start sharing the weekly options I'm doing as well.  I have set up all my dividend accounts with margin and use that margin money to try and drive weekly, passive income, without having to touch my dividend "base" stocks.  As you will see, these are still well known stocks, some have dividends, others do not.

 So this week so far, I've brought in $793 in passive income.






Results:  AA expired worthless, although capital dropped, will resell $9.50 calls or sell stock and move to a new position, cost basis is sub $8.50 from prior call expiration's on this one.

BAC - took a gamble on this 12.50 put, the stock dropped capital as well, I will be assigned stock at $12.11 on Monday. I will most likely sell $12 weekly calls and only take out the differnce of the premimium.  Ie if I can get .16 cents for the call, will only take out .05/share to get the costs basis down to $12 in case BAC raises to $12 by end of week and I'm forced to sell.

Ford puts expired worthless, so money in the bank.

Q1 2012 Progress and Options/Day Trading

So I've been horrible about updating this bad boy, but hopefully will find more time now. I know most of the bloggers seem to do a monthly review, but I don't think that will work for me.  Being a husband, a father of two and trying to hold down a job and train for an Ironman all that same time eats up a lot of my "free time".

To sum it up, this past quarter was a good one.  5 of my stocks raised their dividend amounts, bringing my quarter total to $161.55 of dividends received, which I'm very happy about.  Considering Q1 of 2011 I brought in $17.94, you can see it's around a 1000% increase. Obviously additional stock purchases played in here, but none the less, the train is heading in the right direction.  I still firmly believe that dividend growth stocks are the most sound way to invest and continue to plan on using this as my A1 strategy for my retirement.

That being said, I have really become interested in options and some day trading, I've become pretty well read on covered calls as well as puts, and now that I have my feet wet so to speak with a few trades, I think both strategies can provide a nice little enhancement to overall return.  Covered calls can almost be viewed at as "dividend enhancer" if played right, and puts you can use to sit and wait, while collecting a premium, until a stock you want gets to a price you like.  Both are win/win in my book.  Even if a covered call gets called you away, just simply re-initiate in the stock and it's like you never lost it in the first place.

The way I use the profits from the options/day trades/etc.. is to include that into my core reinvestment that I make each month, so essentially it helps me to build more capital (faster) to invest in DGI stocks.

Below are the options and trades I have made so far, as you can see, I've had some hits (and the biggest one AUMY, was a impulse buy without even thinking or taking a quick look at the stock chart, lesson learned).  But even with my losses, overall I'm up close to $1200 in just 3 months.

Well that's all for now, be back in June at the latest, but I hope to try and post more.

-The Dividend Addict

My Story

Well it's been a while since I've been able to touch this, but things at work have finally settled down, so let's get back to it.

I figured for my first real post, it's probably best to start at the beginning.  I have been gainfully employed since May of 2000, luckily all this time at the same company.  My early investing days were nothing special.  I participated in not only our employee stock purchase program, but as well as in our 401K program.  Long story short, we eventually went private to reorganize our company, so we got compensated for our public stocks, which was not much to write home about for me.  Throughout this I continued to put money away into my 401K however.

As the years went on and I became more and more interested in the market and strategies, especially since 2000 to current is being called the worst 10+yrs in the history of the market, I was looking for a way to generate returns without having to "guess" on which stocks would give you a capital gain.  Almost by accident I had an account (I have 3 currently.  401K, "Fun Money" and my "Self Run 401k" - which is my dividend portfolio) that just happen to have MCD and PEP in it.  I kept noticing every quarter that these stocks would not only give me back some money, but every year or so, the amount seemed to go up.  Not being a finance major, or ever really being taught on economics, I went to research why I was getting this money back.  Low and behold, the word "dividend" was something I became very interested in and read up on it as much as I could.

This was around 2008 and I decided to create my "Fun Money" account.  I was still throwing as much money as I could into my 401K and pretty much that was it.  I decided to explore these dividend stocks a little more and create the account thinking I'll see what kind of returns I can create with it.  Even through the rough market times of 2008 until now, the account consistently was throwing off increasing dividends (and since I got in at some of the lows of 2008, some nice capital appreciation as well).  I thought to myself, "Wow, there is something here behind this strategy."

So after playing with the "Fun Money" account for 3 years, I decided to change my retirement strategy as well.  In Jan of this year, I decided to cut my 401K contributions to the amount where the company matches it fully and take the rest and run my own "401K" account.  There were a couple of reasons I felt this was a good move.

1.  Late last year, my normal 401K account had grown luckily to over 6 figures.  I am very lucky/fortunate in finding the job I have, I realize this every day.  That, along with my desire to have financial stability, has lead me to be a very prudent saver.  The amount in there at such a relatively young age, at least in regards to investing, had given me a sense of security so to speak to explore other options.

2.  One of the biggest flaws I see in the 401K is the minimum age before you can touch the money.  Say you are fortunate to retire at 45, or even 50.  Well guess what?  You can't touch the 401K without paying "penalties" before 59.  Personally I'm hoping to retire before 59. So this presented a problem, how would I support myself before 59 if I'm retired?  I needed a way to "fill in that gap" so to speak.  And dividends spoke to that need loud and clear.  (Yes I realize on the flip side that dividends are taxed, etc, etc, to me the trade off of having the money when I want it without penalty and being able to do with it what I want is worth it to me).  On top of this you have to actually sell the mutual funds in your 401K to get your money, yes some mutual funds pay distributions, but they can be inconsistent and can go up and down themselves.  So eventually, your 401K goes from it's full amount on the day you retire to zero (well in theory at least).  To me it seems there has to be a better option than that.

3. It's fun, it's really a hobby to me now.  This stemmed from my "Fun Money" account.  Checking the different company links when you know the general time of announcement dates, seeing the dividends increase year after year, watching your personal dividend paybacks going up quarter after quarter in the numerous spreadsheets.  To me it's really exciting and an enjoyable way to pass some time.

4.  It's not only setting up me, but my children and their children for future generations.  I'll go into this in another post, but with dividends, it's all about having time to let the dividends grow.  Eventually my plan is to roll my dividends into my estate plan, so when the reaper gets me, I have set up parameters to where my children (two girls), will not be able to sell any of the stocks I acquired (unless certain parameters are hit where a stock is tanking), but rather will continue on receiving the dividends I had established.  (And hopefully in 50+ years, some of those might be throwing off 30-40% annually for them)

So that's my story for now.  Currently, like I said, I have 3 accounts.  My normal 401K, my "Fun Money" account, and the "Self Run 401K" account that I started in Jan 2011, that this blog will focus on.  I plan to very transparent with the amounts I have invested, returns, etc.   Also if you have any questions don't hesitate to ask.  As the disclaimer states, I'm no trader, financial adviser,etc.  Just a normal guy who has done a lot of reading on dividend stocks and who really likes this strategy to investing.   I'll leave you with my current returns, and in the next post go over the different stocks I have right now, why I chose them, and the margin strategy I am currently engaged in as well.

Welcome!

Hello All!  (Well at least those unfortunate to have stumbled upon this by mistake somehow, ha).  As stated in my profile, I think about investing ALL. THE. TIME.  If they had a twelve step program like AA for investors, I would definitively have been through it several times already and lined up ready to go through it again.  As I tell my wife, there are worse things to be addicted to.

This blog will be my ramblings in regards to my investments, some of the different "techniques" I use, my portfolio progress, and my dreams of grandeur.

I will post as time permits, hope you enjoy whatever small nuggets of info I can provide.

--The Dividend Addict

(Disclamer: I am not a professional investor, nor do I pretend to be.  All ramblings are representative of my thoughts and are opinions only, I don't need any of you trying to sue me off of things I post on this site, haha)