This trade was actually executed on Tuesday 09/06/16. I didn’t get a chance to write about it until today.
I’ve written several write-ups on GPS investments recently, so this one won’t be following the core philosophies article on my investment thesis process. The original investment thesis was done nearly a year ago when I first invested in shares.
It’s probably time for a refresher. I’ll do that on the next one.
To summarize: I own 154 shares in the taxable account at a cost basis of $21.69. As long as I can get it for less than that cost basis (or maybe even a little more considering the tax-adjusted yield), I’m happy to try to use puts to transfer ownership to the beneficiary IRA.
GPS will go ex-div on 10/3/16, a few days before this trade expires. Management left the payout at $0.23/share, which was disappointing, but understandable. Even with the flat dividend payout, the company maintains its status as a dividend contender.
It would have been nice to get an expiration before the ex-div so I could get the benefit of a payout if I’m assigned, but the yield/downside offerings weren’t that attractive for the 9/30/16 expiration.
Oh well. The premium exceeds the dividend payout by about $6, and obviously has a much shorter duration than a whole quarter..
SPL (Strike Price Logic)
Strike price logic from last time justified a $21.50 price. This is a slightly lower strike with an equivalent amount of downside protection and a bit more annualized yield.