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+--- Thread: Interested in Monthly Dividends (/showthread.php?tid=1592)
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RE: Interested in Monthly Dividends - Sniper - 11-22-2016
If you don’t want to expose your investments to relatively less-known companies with risky business models, one potential way out is to buy solid dividend-paying stocks with staggered quarterly payout schedules. For example, you can build your dividend-paying portfolio by picking stocks that pay monthly dividend.
RE: Interested in Monthly Dividends - NilesMike - 11-22-2016
You can accomplish this by augmenting with option trades. Current example AAPL: Covered call. Stock $ 111.73, sell 30 DEC 16 $114 call for $1.60. (1.4% return if AAPL expires below $114). If AAPL expires at/above $114 return is 3.5% return for 38 days. The sell puts until you own AAPL again. Rinse and repeat.
RE: Interested in Monthly Dividends - crimsonghost747 - 11-22-2016
(11-22-2016, 07:23 AM)NilesMike Wrote: Current example AAPL: Covered call. Stock $ 111.73, sell 30 DEC 16 $114 call for $1.60. (1.4% return if AAPL expires below $114). If AAPL expires at/above $114 return is 3.5% return for 38 days.
There is something that I don't understand about this. Because to me it looks like you will win if apple stays under $114 and you will also win if apple goes above $114. And 100% certain profit with zero risk is something that sounds too good to be true.
RE: Interested in Monthly Dividends - NilesMike - 11-22-2016
(11-22-2016, 10:57 AM)crimsonghost747 Wrote:(11-22-2016, 07:23 AM)NilesMike Wrote: Current example AAPL: Covered call. Stock $ 111.73, sell 30 DEC 16 $114 call for $1.60. (1.4% return if AAPL expires below $114). If AAPL expires at/above $114 return is 3.5% return for 38 days.
There is something that I don't understand about this. Because to me it looks like you will win if apple stays under $114 and you will also win if apple goes above $114. And 100% certain profit with zero risk is something that sounds too good to be true.
You are risk of AAPL falling below your purchase price, that is all and the loss is offset by the $1.60 you collected when you sold the call. Your breakeven price in this case would be $110.13. Below that you are losing money on this trade. But if you are holding AAPL long term, all it means is that you sell another call next cycle.
RE: Interested in Monthly Dividends - crimsonghost747 - 11-22-2016
(11-22-2016, 05:00 PM)NilesMike Wrote:(11-22-2016, 10:57 AM)crimsonghost747 Wrote:(11-22-2016, 07:23 AM)NilesMike Wrote: Current example AAPL: Covered call. Stock $ 111.73, sell 30 DEC 16 $114 call for $1.60. (1.4% return if AAPL expires below $114). If AAPL expires at/above $114 return is 3.5% return for 38 days.
There is something that I don't understand about this. Because to me it looks like you will win if apple stays under $114 and you will also win if apple goes above $114. And 100% certain profit with zero risk is something that sounds too good to be true.
You are risk of AAPL falling below your purchase price, that is all and the loss is offset by the $1.60 you collected when you sold the call. Your breakeven price in this case would be $110.13. Below that you are losing money on this trade. But if you are holding AAPL long term, all it means is that you sell another call next cycle.
Thanks for the explanation! Makes a lot more sense now.
RE: Interested in Monthly Dividends - NilesMike - 12-01-2016
(11-22-2016, 07:23 AM)NilesMike Wrote: You can accomplish this by augmenting with option trades. Current example AAPL: Covered call. Stock $ 111.73, sell 30 DEC 16 $114 call for $1.60. (1.4% return if AAPL expires below $114). If AAPL expires at/above $114 return is 3.5% return for 38 days. The sell puts until you own AAPL again. Rinse and repeat.
That AAPL call could be bought back for .65 today leaving .95 or $95.00 in 9 days. Almost 1% return.
It's not for everyone but informational nonetheless.
RE: Interested in Monthly Dividends - Sniper - 12-05-2016
I am still vary of investing in the tech giants, as the necessity of such goods makes me think twice. Energy stock or walmart stocks are something more which we can relate to than aapl or msft.
RE: Interested in Monthly Dividends - Sniper - 12-13-2016
Yes adding these three IBM, MacDonald, and Proctor and Gamble in the portfolio will earn a monthly income eventually.