“An education pays the best interest” as the saying goes…It has been two months since I deployed my Double Dividend strategy. It is the right amount of time to look at the results and take away any insights from this investment strategy.
Summary of investment decisions
Here are the details of the last two months of investment decisions:
– On 2.21.2021 with the SPHD spot price at $39.72, I sold a March 2021 $40 Call option for net proceeds of $49.45. This contract had an expiration date of 3.19.2021. At that time, my shares were called away and cleared about $73 although missed out on the upside the stock was able to trade at that time. This date was also important because it was the day before the ex-dividend date, which caused me to miss the normal $15 monthly dividend on my 100 shares.
– On 3.22.2021 since my shares were called away, I entered into another current month covered call with 100 shares purchased at $42.15/share and sold an April 2021 $42 Call for net proceeds of $77.45. Today is the contract day & declaration date, with the stock trading about the $42 strike price my shares will once again get called away. I will able to net a gain of $62, I lost on the upside since it is trading at $43.87 and the $12.60 of dividends is set to be paid at the end of the month.
Next Steps...
With two months in a row of having my shares called away, missing the upside stings a little bit. I do have to remind myself that I am able to capture more monthly gains than the normal dividend distribution is set to provide. So, in theory, the strategy is working and providing positive returns.
With that said, I am going to stick to the strategy and continue to deploy the monthly covered call strategy on SPHD. As always, I will continue to track these profits/(losses) in my portfolio and will provide an update along the way.
Please note, every investor needs to be aware of the tax implications on each investment decision. Although I do deploy a SPHD covered call strategy in my actual portfolio, this blog post is for educational purposes and doesn’t serve as investment advice.
I am a finance professional with over 20 years of experience and very passionate about all topics related to finance; enjoying the aspect of teaching and educating others along the way. All in all, I will show you how big this money tree can get over time as I get the branches (Earn, Save, Invest) as high as possible…Click here to see my financial progress to date: How high is the Money Tree?
