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.
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.
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.