DGI Adventure 09-08-16 Sold Cash Secured Put  – HCP, Inc. (HCP) – $37.50 strike – Sept 16 Expiration

This trade was actually executed on Thursday 09/01/16. I didn’t get a chance to write about it until today.

I went through my investment thesis process back on June 22nd when I first sold a put for HCP, so I won’t do a full-blown write-up here.

I have updated the portfolio and income tracker back at the mothership to reflect this position.

Dividend Cycle

Next ex-div should be early November. It’s not clear to me if that will be before or after the HCR spinoff.

HCP is the only REIT that is a dividend champion, but the upcoming spinoff might screw that up, although maybe not right away? Who knows really…if I’m not assigned here I might wait until after the spinoff to do another trade because I don’t want to have option weirdness.

This trade will expire well before the next ex div and is the equivalent of ~42% of a quarterly distribution.

Investment

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SPL (Strike Price Logic)

I realized back on August 5th that I really need to pay attention to my tax adjusted yield when considering my strike price for REITs that I’m trying to move out of my taxable account. That post justified the $37.50 strike price. That put expired worthless, so I’m trying again.

Not quite as good of an annualized return this time, but the strike prices on the HCP options are kind of spread out. It’s like this or $40, which would be in the money. So I was kind of forced to trade downside protection for yield.

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