DGI Adventure 03-14-17 Sold Cash Secured Put – SPDR S&P 500 ETF Trust (SPY) – $237.50 strike – Mar 15 Expiration

This trade was executed yesterday 03/13/17.

I don’t go through my investment thesis process for index fund trades. The idea behind passive index investing is to completely give in to efficient market hypothesis, so there isn’t really any point in looking at a bunch of quantitative metrics. There’s also no warm and fuzzy or cold and prickly. It’s a bet on the continued success of the US Economy. It’s either going to work or it isn’t.

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

Dividend Cycle

SPY goes ex-dividend on every quadruple witching, which is the third Friday of March, June, September and December. The next ex-div date, then, is this Friday, 03/17/17. I don’t know how much the dividend is yet. The distribution is pretty random.

Again, I don’t know what the distribution will be. It’s been in the $1/share range though, so I’m guessing, this premium will be around 75% of the quarterly payout, while only being in force for two days.

Investment

SPL (Strike Price Logic)

As discussed I would kind of like to get assigned in order to be eligible for the dividend, so I went for the strike closest to the money. It was actually slightly in the money at the time I sold the put. So to be fair, the annualized return was technically a bit lower at the time I made the trade, but since it closed out of the money, I’m going to count it all as extrinsic value. It’s kind of unrealistic to annualize the return for a two day trade anyway.

We’ll see what happens.

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