DGI Adventure 12-06-16 Sold Cash Secured Put – Cisco Systems, Inc. (CSCO) – $28.50 strike – Jan 06 Expiration

This trade was actually executed on Thursday 12/01/16. I didn’t get a chance to write about it until today.

This post will not exactly follow my investment thesis process since I went through that exercise earlier this year in June when I first initiated a position in CSCO. Some additional discussion is available from my previous trade in October as well.

The point of this post is really just to document the trade.

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

Dividend Cycle

CSCO last went ex-div on 10/3/16, so I would expect the next one to be early in January. Historically that January date is in the first week of the month, so there is a good chance that ex-dividend date will come before this trade expires. Fortunately the option premium I received exceeds the quarterly distribution by about $0.08/share, so I don’t mind missing it that much.

Said distribution has been at $0.26/share for the last three quarters, so that Q1 2017 payment will likely remain at that level. I expect an increase after that since I see no reason for the company to break its dividend challenger streak of 6 consecutive years of increases.

Investment

SPL (Strike Price Logic

Last time I was able to justify a $29 strike price, so why wouldn’t I go for a $28.50 strike? Besides that was as low as I could go and still get at least a 12% annualized return.

So there you go.

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