Thursday, September 22, 2011

Income investor strategy for today’s market

Income investor strategy for today’s market

          Like all of you, the market action, the fed action, the U.N action, the European action all lead to making me sickly especially when I look at the value of my portfolio.  Today is painful but we have to view it as an opportunity.  If you keep your lists up to date, you can scan through your holdings and look at opportunities to add to your positions or to write calls against positions.

          This last weekend was call option expiration for September.  I was lucky enough to have two of my stocks taken.  This gives me some capital to invest.  I also had six call options expire so I always look to see if I can write calls on these positions again.

Here is what I am looking for:

                A dividend machine that is at least 10 percent below where I bought it.
                A dividend machine that I might have sold in the past because it was at highs and I tend to set stops on my stocks that hit highs with the idea in mind that there is always another stock to buy.
                Current holdings that have call options with a strike price at least ten percent above my cost basis and a call premium equal to at least two quarterly dividend payments.  I like expiration dates of 90 days or less.

Here are a few items I found and traded today:

                Dividend machine MCHP pays a 4.5% dividend yield.  It has been one of my very favorite stocks but I set a stop when it was in the $40 range and was so sad to see it taken. I bought today at $32.25 and wrote a November $35 call for $.70.

                During previous swoons in the market, I have suggested we add to CVX.  My calls on CVX have expired so I wrote a few more today.  My recent CVX buys average $91.5.  I could buy it at $90 today but I decided not to add to my position.  Instead, I wrote a November $100 call for $1.50.

                I hope these ideas help you comb through your income-investing portfolio and squeeze enough extra income to make the market downturn less painful.
Very Truly Yours,
Enhanced by Zemanta