Happy New Year! First, let's review this week.
Dividends Received - $86.33:
- BSV - $5.29
- BNDX - $40.46
- TROW - $28.08
- MAIN - $12.50
- ICE - $11.88
One trade was made to bump up the PADI (Projected Annual Dividend Income). This was exchanging 28 shares of Pfizer for 22 shares of Merck. This was done for a couple of reasons:
- Increased the PADI by $16.
- I currently have a 43% gain in Pfizer since the start of the portfolio and do not mind taking some profit.
- Merck has a higher five year dividend compound growth rate vs. Pfizer and I expect that trend to continue. (8.0% vs. 5.4%)
- I believe Merck is more undervalued that Pfizer currently.
- With 100 shares of Merck I can start selling covered calls to boost income.
Other trading activity:
- Sold ONL which was a spin off from O a month ago.
- Acquired some Heliogen shares and warrants!
- This is a fairly minor investment but the technology they have is pretty superb. Company is backed and supported by Bill Gates and has a lot of potential in the future. This is a long-term hold growth opportunity.
- There's not a lot of information on the warrants other than that they're redeemable for one class A share by May 2028 for $11.50.
- Added some SHOP for growth opportunity.
Let's talk options. I'm continually fascinating by using options to drive additional income. More research is needed, however I like the idea of placing smaller less risk averse bets instead of going for the YOLO option trade.
My main tool I use for research is OptionStrat. Knowing the % success rates, value of the option over time and knowing how to cap my losses is key. I've seen way too many people playing with trades that put them at risk, or have a 3% success rate.
- Covered ABBV in an earlier post this week. This strange is a directional hedge that pays off if ABBV is under $130.13 or over $144.87 on 01/28. Implied volatility is 22% which shows a 36% chance of profit, but I believe volatility is higher based on movements in last month.
- PFE covered calls. Every time I sell one Pfizer rockets up. I'll continue to monitor and rollover or buy back if needed.
- MRK covered call which we spoke about above.
- VZ iron butterfly. Goal is to keep Verizon between $50.66 & $53.34 by 01/28. Max loss is $66 if stock trades below $50 or above $54.
- HIMX long call. Speculative trade, but couldn't resist the 6 month expiration and cheap premium.
- MMP covered call. Stock goes up 2.9% yesterday. I'll continue to monitor closely to buy back or rollover if necessary.
On the Progress Tracker tab, I've added weekly S&P, Nasdaq and DJIA index performance since 10/16. It's a helpful reminder for myself. While I'd love to beat the index returns (and this is one of my goals for 2022), my portfolio has a lower beta (0.85) intentionally. I still have scars from 2008-2010 that shape my views today. While I believe the stock market is a good place to keep my money, I'll do that responsibly by investing more heavily in value.
Hope everyone has a great 2022!