Sunday, November 3, 2013

New Position: WFC

After unwinding AFL and PFE, I wanted to get a good share of the proceeds back into the market.  With the market hitting new highs a few days during the week, I was worried about buying at a top; one of my criteria is to look for an annual dividend yield percentage of from 2 to 5% - for the most part, this has served as protection from the risk of buying at a price that is too high.

After an initial screen, I had four or five good choices.  I realized that the sector not currently included in my portfolio was a financial – so I chose WFC for the new position. The covered call is out of the money at the moment, so I expect to have a chance of collecting the dividend here.

Here’s the analysis.



Bought 300 shares at average share price $42.78 (total $12,835.00)
Sold 3 WFC Nov 2013 $43.00 for a net of $130.24

Net Profit:

1) Options Income:  = $130.24
2) Dividend Income: Ex-date is before November expiration, dividend is $30.00 ($90.00)
3) Capital Appreciation if assigned at $43.00:  $47.89

Total Net Profit if Assigned and dividend collected:  $268.13
Absolute Return on Investment: ($268.13/$12,835.00) = 2.09%
Annualized Return if Assigned (30 days):  2.09%*(365/30) = 25.42%

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