I mentioned a limit order that was filled yesterday with BBVA. I had a second limit order filled yesterday but didn't have time to talk about it until today.
I believe NSC is on a lot of watch lists right now. It hit a 52-week low yesterday of $60.96/share. It has a 52-week trading range of $60.96-$78.50. They reported weaker than expected earnings yesterday due mainly to weak coal exports. They also said that weaker coal exports will carry into 2013. I believe this to be a short-term problem and I think the company is a great long-term investment here.
Yesterday I sold 1 Jan 19 '13 $60 Put for $2.10. If executed I would own another 100 shares of NSC for $57.90/share not counting commissions. This is a yield of nearly 3.5% on a stock that has historically had a high dividend growth rate. If the put expires I would keep the $210 minus commissions.
I've already made a couple of purchases this year for NSC and I also sold a longer dated put that expires next March. If these options contracts get assigned then NSC would easily be my largest holding. That is not a big concern as I plan on aggressively building my DG portfolio next year.
I've now capped out my options portfolio and will probably be writing another article as an overall options update. I don't want to keep more cash than 15% of my total DG portfolio in this options account. As it stands, I have to keep 9k in my options account per margin requirements. This is right at the 15% threshold. My options trades will likely be very limited through the rest of the year.
I've been wanting to get into puts for a while now. Thing is my brokerage accounts are not set up for it and I have yet to fill out the proper paper work. What you just said above has convinced me to get it done next week. I like NSC but i'm not ready to pay $61. This is a great way to get paid while waiting.
ReplyDeleteHi ADY,
DeleteThanks for stopping by to comment. You have a nice looking portfolio and I believe you could benefit from selling covered calls and puts to increase income. I don't have many stocks over 100 shares yet so I haven't sold many calls yet but I plan to as my portfolio grows.
I'm also still fairly new at options trading but my income from options premiums this year will be well higher than my dividend payments. Maybe I just had a really good year, It seems easy to make extra money selling puts in a rising market which is what has happened this year.
I wish you luck and I'll be watching your trades.