Picking Up The Pieces

Picked up 230 and 144 shares of T at $34.27. This allowed me to increase my position in the 2 accounts by 5 and 2 shares repectively in 10 days. I went from 225 shares in the first account and from 142 in the second account.

Those 2 trades allowed me to increase my potential annual dividend by a total of $13.16. T has been just chugging along and staying relatively flat. As long as I increase my shares on each trade, I have won already. As I see it, if the price drops after I repurchase more shares, then I will continue to collect the dividend until the price appreciates.

On 4/28/2015, my share count was at 220 shares on the account that has 230 shares in it. That represents a 10 share increase and a 4.5% increase in total shares in just over a month. As for the account with 144 shares, it had 139 shares in it as of 5/18/2015. This represents a 5 share increase and a 3.6% increase in total shares in 2 weeks. I cannot complain about that.

A few shares added on each trade really increases the total annual dividend. I have been trading in 3 accounts lately, and the numbers are coming along quite nicely even though the stock is just meandering along. I would not mind if T kept doing exactly the same thing. Good luck to all.

I am still working to get my phone bill straightened out. Imagine this. I have been a shareholder of T both directly and indirectly for decades. However, I have phone service with T Mobile. Someone must be trying to tell me something. Anyhow, I have been sitting on this phone for quite some time trying to get an operator or representative to iron this out. It is still ringing, but the computer told me it was going to connect me to a representative. That was probably 100 rings ago. Great customer service, so far. Well good luck in the market, and let me know how all of you are doing.

Keep cranking,

Robert the DividendDreamer
AKA — Seeking Dividends

Follow me on Twitter– Seeking Dividends@DividendDreamer

Seeking Dividends
AKA — 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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8 Responses to Picking Up The Pieces

  1. TwoInvesting says:

    Hi Robert! Your strategy seems to be working very well!! I do have some questions. Maybe you could direct me to the post, if you’ve already explained this… Thanks!

    It looks like you’re selling at “highs” and then buying back on dips of slightly higher than 1%. This is allowing you to purchase higher increments of shares each time. Since you own roughly 3500 shares of T (on your Top Stock Holdings page), how is it that you’re deciding to sell just over 1000 shares rather than the entire amount? How often are you able to get this at least 1% gain? Since you are reliant on the price of T to fluctuate, do you ever find that you may sit on the stock for awhile since you need to wait for it to drop in price to buy it again? If T goes through a period where it stays higher in price, you’d miss out on those gains and a repurchase of the stock at the higher price may eat into the profit you made when you sold. Additionally, have you factored in the dividends that you might miss out on if you happen to be in cash for the ex-dividend date?

    You also mentioned selling covered calls. Just out of curiosity, I pulled up the options chain for T and came up with this:

    Current price of T: 34.35
    0.5% higher = 34.52
    1% higher = 34.69
    1.5% higher = 34.87
    2% higher = 35.04
    1% lower = 34.01
    2% lower = 33.66

    For the call option expiring on Jul 2 (31 days to expiration):
    Selling 10 call contracts (1000 shares of stock)
    Strike price of 34.50: $620 in premium
    Strike price of 35.00: $400 in premium

    Using the 35.00 strike, you’d be able to lock in a $400/month premium per 1000 shares committed. You’d instantly be able to take that $400 and use it to buy 11 additional shares of T.

    Should the stock hit the 35 strike and get called away, you’d make about 2% compared with today’s close. (Given the premium, your actual cost was 34.60/share.)

    If these shares get called away from you, you could then get paid to wait to buy them back at a price 1-2% lower by selling puts.

    Using the same options table (expiring Jul 2):
    Sell 10 put contracts (1000 shares of stock)
    Strike price of 34.00: $540 in premium
    Strike price of 33.50: $370 in premium
    Strike price of 33.00: $250 in premium

    Have you ever done this strategy? You even have plenty of shares in order to sell 20 contracts/ month, netting, on the conservative side, at least $800 each month just on the call side.

    How would this selling calls/puts strategy compare to your current method? Better, worse? I don’t yet have the luxury to be able to sell this many contracts. It will be a fun day when I do!

    Thanks,

    Scott

    • I will answer the first question first.

      I have a core holding of stocks. However, I decided to utilize a strategy I invented back almost 20 years ago when I was trading in open accounts. It was great, but the taxes ate me up and a bad trade could cripple you and you still owed the taxes. Because the trades were in an open account, I could trade all day and get in and out. However, in an IRA, the funds have to settle. You. Can buy-sell-buy, but you can only sell-buy without having a free ride -I triggered one 2 weeks ago.

      Anyhow, I decided to use my new contributions to my IRA as my trading funds. That way, I have my old holdings working and reinvesting, and I am looking to work the trading strategy for 500 trades or more at 1%. It works well in a sideways market or stock which I am exploiting.

      I know that if the stock trends higher, I will miss out on the move, however, that is the gamble. Also, I cannot trade puts in an IRA, only covered calls which I am OK with. It is very hard to keep track of all the goings on and also have day to day life and a job. I do not think I could or would want to complicate it any more.

      I did look at the calls for July 10. That would allow me to collect the dividend, collect the 35 strike price, and the call premium. However, I feel T might get a pop soon if Direct TV deal flies. So, I am in a wait period.

      Hope this answers most of the questions.
      Hit me back if I left out something.

      Keep cranking,

      Robert the DividendDreamer
      AKA — Seeking Dividends

      Follow me on Twitter– Seeking Dividends@DividendDreamer

    • Also, as far as dividends. The trades are usually made only if I can gain 1% more shares on the buy and 1% increased cash on the sell. The dividend will usually give me 1.3%-1.5%. That is equal to a trade or so, and I usually try to catch the dividend before the trade. The good thing about a normal market is that the prices go up and down, and that is what I am relying on for this strategy to work. It is only a small part of my investment in the market, but after a few more trades, it will become a much

    • A much more important part if the trades go as planned. That may or may not happen, however, if I do not try, I will never know.

  2. Vivianne says:

    I used to have tdameritrade on a taxable account, it still took a few days to settle. So even though, I could quickly make $50, but I’d miss out on the biggest gain, as I didn’t have the fund to buy it right back. That was part of the reason why I can’t be a day trader.

    • If you have a margin account, it is no problem. However, an IRA cannot be margined. I do not want to trade in a taxable account because of the tax consequences. It can be an issue if you get in and make a bad trade towards the end of the year. You still owe the taxes even if you are upside down on the last trade. Then, I might have to sell at a loss to cover the money owed to the tax man. Not a good scenario. So, in an IRA, it is a non issue. The only thing is having to allow the money to settle. I am OK with that. Thanks for stopping by. Good luck.

  3. Nuno says:

    wow, great work! I have a strategy like that but I’ve been aplying it on a rather iliquid stock of portuguese stock market. I can’t look at the market duting opening hours so I have an ultra-conservative approach.
    I made 8 trades this year, made 2% in each. Not bad!
    Keep going! only can do

    • I have been following your progress for a while. I saw your strategy on your blog a while back. As the actual dollar amount increases, it becomes easier to take a smaller gain and still make money.

      On an I liquid stock, does it buy or sell when the price hits? Or do you have to wait for the order to fill? Does it pay a dividend in case the trade gets upside down? Good luck. Keep in touch.

      Keep cranking,

      Robert the DividendDreamer
      AKA — Seeking Dividends

      Follow me on Twitter– Seeking Dividends@DividendDreamer

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