This trade was executed yesterday on 10/04/16.
I am trying to transfer ownership of my REITs from my taxable account to a tax-advantaged inherited IRA. I was successful at getting assigned my HCP shares, and now I’m trying to complete the process by selling puts in VER as well. I’ve been assigned 200 shares so far. I’ll need another 200 to match the current position in the taxable account.
When I sold my most recent VER put, I lamented the fact that the contract would expire two days after the ex-div date, which was going to be Wednesday 9/28. Well sure enough, that ex-div came and went, and my put ended up expiring last Friday (09/30) worthless.
Oh well. I’m going back to the well again. Shouldn’t have to worry about dividends again till the end of the year. In the meantime, the premiums I’m receiving exceed the dividend payout of $0.1375/share.
SPL (Strike Price Logic)
My aggregate cost basis on my 400 taxable shares and 200 shares in the IRA is currently $9.82, so anything below that is golden.
Because the dividends are taxed at the full income rate in my taxable account, I’m actually okay with several strike prices higher than this. I can accept “averaging up” on cost basis, because my effective yield is so much higher in the tax-advantaged account.
Fortunately I didn’t have to settle for anything above my cost basis this time around. I got a nice annualized premium yield, with a comfortable amount of downside protection.
This trade was available because there was some really good headline-related volatility today in the “rate sensitive” securities like gold and REITs. That was great timing since I was due to renew my exposure to VER shares.
Also, one of my limit orders for VNQ is tantalizingly close to the current market price. I guess I’m hoping for more hawkish fed talk, or maybe we just need a really strong jobs report…