Friday, November 6, 2015

Financial Planning Weekend Update: November 6, 2015

Monday November 2, 2015

Last week I transferred another chunk of money from my 401(k) to the Rollover IRA. Today I used those funds to establish a position in Verizon (VZ) by executing the following buy/write:

Including commission and fees my cost basis in VZ is actually $46.56. This position adds $1,582.00 to my annual dividend income which now totals $5,973.04 for a yield on cost of 4.45%.

This morning ED is coming in a little and the time value in my Nov. 20 $65 calls is $0.83, exceeding the ED dividend of $0.65. So for now anyway those are not in danger of early exercise. ED's ex-dividend is Nov. 16, so I'll have to keep a close eye on those calls on Nov. 13 if they're still in the money.

My MRK calls expire Friday and are still deeply in the money so those will almost certainly need rolling out Friday afternoon.

Tuesday November 3, 2015

HCP reported a good quarter: a 2 cent earnings beat with revenue up 10.3% year over year. The troublesome HCR Manorcare properties are almost gone with 12 sold and the remaining 38 under contract. That doesn't seem to be good enough however; the stock closed down almost a dollar at $36.73. The stock is ex-dividend on Thursday so I may buy another block tomorrow to lower my cost basis a little and capture the dividend.

ED has come in a bit more and spent most of the day out of the money but closed up fractionally at $65.54

As of tonight only the MRK position is deep in the money: $2.61.  That's almost certainly going to get rolled out Friday afternoon. I'd like to roll up as well but with so much intrinsic value in the $52.50 there isn't much time value in the next higher strikes. The weeklies only run to December 11 so I'll probably end up with the Dec 18 $52.50 and knock another 40 cents or so off my cost basis. The next ex-date will be in the first two weeks of December so I'll need to watch that carefully.

Wednesday November 4, 2015

Except for the continuing decline in HCP nothing much happened today. I did take a shot at HCP for $35 which was not filled.

Thursday November 5, 2015

HCP didn't hit my bid yesterday and of course since it's now trading ex-dividend the price has dropped after the close by about the dividend amount plus a little more this morning. At least the calls are in no danger. VZ and MRK are ticking up a little and ED is flat.

Friday November 6, 2015

Big beat on the jobs report which likely means the FOMC will finally boost the discount rate by 25 bps in December. It's about damn time.

Not surprisingly, everything is down big time. The positive for that is all but my MRK position are out of the money and I rolled that out rather successfully:

Ordinarily I would have waited until 3:30 or so to roll out, but with volatility high early I decided to take my shot. The trade nets out to $414.16 after commission and fees. Extra thanks go to Schwab's options desk who got my fill almost instantly and $0.12 higher than my credit limit. I will have to keep an eye on the position in a few weeks because MRK's ex-dividend date will be coming up around December 11 or so. At this point I've collected $3.07 per share on my original 600 share purchase and $1.70 on the 100 shares I bought more recently reducing my overall cost basis to $53.59.

Unless ED pops back into the money by the 13th there will be no more activity in the IRA until Monday the 23rd when I'll write a new batch of calls on the three remaining positions. HCP will be paying a dividend on the 24th which will now buy proportionally more shares as it re-invests.

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