Thursday, July 28, 2016


M*MoneyMadam will be on vacation through August 15, 2016.  Thank you M*

Monday, July 25, 2016

Play Gamestop with an October call

English: GameStop store, 2423 Ellsworth Road, ...
English: GameStop store, 2423 Ellsworth Road, Ypsilanti Township, Michigan (Photo credit: Wikipedia)
Gamestop, symbol GME is not quite a Dividend Machine. 

GME passes the criteria on dividend yield, on EPS (earnings per share) greater than dividend paid out, on D/E ratio.  Yet, their dividend increases have slowed lately.  Their dividend history is only 4 years and I like to see at least five years of steady dividend growth and most important they are closing stores and reworking their "game" plan and that has resulted in declining revenues.


However, this is the time of year to buy stocks that might have a pump up in revenue from the Christmas season.   This is by no means fool proof and I find I need to sell on the rumor or expectation rather than waiting for the news of pumped up revenues from Christmas.

Today I am using a covered call to justify my buying GME.  It is a cheap stock with a P/E (price earnings ratio) of only 8.19 and a call that will deliver a mighty 13.8% return should my stock be called away.

I am selling the call with an October expiration so that I get the dividend income as well as the call premium income.  See the details in the table below.

M* MoneyMadam
Disclosure:  Long GME with calls

Wednesday, July 20, 2016

Play the Microsoft news with a Call Option

Microsoft, MSFT, has been stuck in the low $50's for a while.  We added it to the 2016 Model Portfolio in February at $50.40.  We have received two dividends so far and if we still own it on 8/16/2016, we will get another one.

We also sold two calls.

One expired in May and another is due in August.  I think we will lose MSFT to the call buyer at $55 which is the strike price.  Total return has been quite nice.  If the call is exercised at $55, our return is 14.72%.  See the table below

The 2016 portfolio owns only 100 shares of MSFT, but in my personal portfolio, we own more.  Today, I will sell another call.  October $60 for $.77.  See the table below to see how the math works on this call.

M* MoneyMadam

Disclosure:  Long MSFT with multiple calls

Actual trade resulted in call premium of $.85

Sunday, July 17, 2016

2015 Portfolio Lags

In spite of record stock market prices and a rebound in energy stocks since the beginning of the year, the 2015 portfolio continues to lag.  It is a small portfolio and way too concentrated in energy stocks.  Most disappointing is the tepid dividend growth. Original dividend when these stocks were bought was $4,129 and today the portfolio expects to pay $4,271 annually for a whopping gain of 0.336%.


Conoco's (COP) dividend cut is most responsible for this poor performance.  Without COP the other stocks dividends have increased 6.15%.   This more in line with our goals.