New Positions: BA and PFE

With the proceeds of three sales resting in the account, I went to work immediately looking to reinvest.  I’ve noted in the past that my goal is to have around only 5% in cash in the Rescue My IRA account – the rest needs to be working in an investment.

The new positions meet my basic criteria – they are S&P 500 stocks, they are rated four or five stars by S&P, and they have dividend yields of between 3 and 6 percent annually.  I usually look for ex-dividend dates coming up during the current quarter as well, so this time I chose BA and PFE – there is still enough cash in the account for one more position, so I’ll add a post later this week. 

Here’s the analysis: 

BA

Transactions

7/2/2013 Bought 100 shares at $103.17 (total $10,317.00)

7/2/2013 Sold 1 BA Aug 2013 $105.00 for a net of $226.74

Net Profit:
1) Options Income:  = $226.74
2) Dividend Income: Ex-date is 8/7/2013, dividend is $0.485 ($48.50)
3) Capital Appreciation if assigned at $105.00:  $165.89

Total Net Profit if assigned and dividend collected:  $441.13
Absolute Return on Investment: ($441.13/$10,317.00) = 4.28%
Annualized Return if Assigned (60 days):  4.28%*(365/60) = 26.01%

PFE

Transactions

7/2/2013 Bought 400 shares at $27.58 (total $11,031.00)

7/2/2013 Sold 4 PFE Aug 2013 $28.00 for a net of $183.99

Net Profit:
1) Options Income:  = $226.74
2) Dividend Income: Ex-date is 7/31/2013, dividend is $0.24 ($96.00)
3) Capital Appreciation if assigned at $28.00:  $151.89

Total Net Profit if assigned and dividend collected:  $431.88
Absolute Return on Investment: ($31.88/$11,031.00) = 3.92%
Annualized Return if Assigned (60 days):  3.92%*(365/60) = 23.82%