Flexibility is the Key

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UPDATE:

MARCH 5, 2015

I now have in my trading strategy 983 shares of T. The share level has steadily increased since I started buying and selling shares with the strategy. Who knows where the stock is heading from here. However, I have put in a sell order if the stock moves to the upside.

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Looking at the calls has given me a little optimism as far as income potential for the month. At the moment, the APR 10 $34.50 calls are paying 32 cents. If I add in the 47 cents for the dividend and the 31 cents profit from selling my ($34.19) shares for $34.50, I will be able to net a total of about $1.10 per share in 37 days. That would be a 3.2% gain in 37 days.

3.2% is not a bad return for a month and a few days if the trade works. I just have to decide whether I want to be ties up for that length of time. If the stock were to head south, I will be holding regardless and end up only collecting the dividend by April 10 only. There are many potential outcomes, however, if I made the sale of the call, I would get a nice premium and also collect the dividend and maybe get a nice profit in the end.

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I have a few things to consider before I make the final decision to do it, and at the moment, I am leaving my options open.

Keep cranking,

Robert the DividendDreamer

—————————————————————

Well, I had a plan to pick up some GE to trade, however, things were not going like I wanted, so I went with T. One thing that I have noticed over the years is that stocks go up, and they go down. It is a fact of life. My plan to buy GE might have worked out in the next few days, however, in the interim, I bought 964 shares of T at $34.35. T ended up trading at a price that is right where I bought it before the last successful trade. This represented a 46 cent reduction in the price that I sold the shares for on last Friday.

Who knows where the price will go from here or whether this is a current bottom. However, in order to profit, I need to initiate a position at some point and go with it. Now, I am going to potentially sell the covered calls on Feb 35 contracts tomorrow if the numbers are right.

I have the shares purchased at a price that I am happy with. If I can generate a little income in the process, that would be icing on the cake. We will see how things go tomorrow.

Maybe, just maybe, I might get lucky and see a nice profit in T while I wait for GE to turn south. It could happen. But, in the meantime, I am staying flexible and going where I think the best chance for a gain exists.

Keep cranking,

Robert the DividendDreamer

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About dividenddreamer

Doing what I can to make the best of today and the most of tomorrow.
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4 Responses to Flexibility is the Key

  1. DivHut says:

    As you stated flexibility is key. Sometimes our best laid plans never come to fruition as Mr. Market has other ideas for our money. T is still a solid buy and with some covered call action you can juice returns further. Thanks for sharing.

    • I am working in my plan as I type. I have my limit order in for T for tomorrow. I only use limit orders and know my maximum in before I ever walk into a trade. For instance, last week, T hit $34.37 early on. Since my cash was not settled, I did not want to make a purchase. However, if I did, it would have been right at where I purchased the day before. I would rather wait a few days and let it possibly hit at the open on a down day. It has worked well for me in the past. Then, if it hits and bounces a bit, I can sell and book the profit.

      We will see how it goes. Thanks for stopping by. I will definitely let you know how it goes.

      Keep cranking,

      Robert the DividendDreamer

  2. Tawcan says:

    Being flexible will get you far in life. Your approach sounds quite interesting for sure. T is a solid buy however you look at it.

    • Yes, T seems quite the dividend king. I am hoping to keep the strategy rolling, yet if it heads south, I have a nice dividend to look forward to collecting.

      Thanks for stopping by.

      Keep cranking,

      Robert the DividendDreamer

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