DGI Adventure 12-08-16 Sold Cash Secured Put – Gap, Inc. (GPS) – $22.00 strike – December 30  Expiration

This trade was actually executed on Friday 12/02/16. I didn’t get a chance to write about it until today.

I’ve actually gone through my investment thesis process twice since I started investing in GPS. The first time was over a year ago, and then I re-checked the numbers last time around.

As such, the main purpose of this post is simply to document the trade.

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

Dividend Cycle

Well this is kind of interesting isn’t it? GPS goes dividend on 12/30/16, which is the same day that this trade expires. That means that if I’m assigned shares I will miss out on the next dividend payment by one lousy day.

That is frustrating, but the quarterly dividend frustratingly remains at the $0.23/share level and I made at least that much with the option premium, so I’ve at least made it up if I can’t double down.

Hopefully they raise the payout at some point next year. They’ll need to if they want to extend their dividend contender streak of 12 consecutive years of increases.

Investment

SPL (Strike Price Logic)

My previous put, which also had a $22 strike, was expiring on Friday. It was going to be comfortably out of the money, but the share price was down sharply that day, so the market was rich for selling puts. I managed to find the same strike price 4 weeks out with nearly a 15% annualized return on the premium.

Yes please and thank you!

Leave a Reply