DGI Adventure 08-24-16 Sold Cash Secured Put – VEREIT Inc. (VER) – $10.00 strike – September 02 Expiration

This trade was actually executed on Wednesday 08/17/16. I didn’t get a chance to write about it until today.

This is an existing position, I’m just trying to move ownership of shares into a tax advantaged account. The dividends are unqualified, so I pay full income tax on them if I hold shares in my taxable brokerage.

Anyway, this won’t really follow the format of the core philosophies article on my investment thesis process.

Sorry.

Previous trades in VER can be found here and here.

Dividend Cycle

The next ex-div date is 9/28/16. The quarterly payout continues to be $0.1375/share for now. As management gets their act together, that should eventually be increased, but there’s a while to go yet I think. This trade will expire before the ex-dividend date, and represents 72% of the quarterly payout.

Investment

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SPL (Strike Price Logic)

Back on 8/17, when this trade was executed, my $10.50 puts were looking like they would end up in the money when they expired on 8/19 (they did…I got assigned). REITs were experiencing a bit of a pull back at the time…I guess because people were trying to anticipate the FOMC meeting minutes “tone”?

Who knows? The point is the share price was down a couple days in a row, and then really dipped pretty drastically in early morning trading. In fact the price had dipped as low as $10.19 at one point.

In other words, the $10 strikes were in play, and they were paying pretty well. If I’m okay getting assigned $10.50 strikes…$10 is even better right?

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