lol Iran has been months away from war since I was in diapers, that is a clever setup though

 

I have nat gas exposure (TLM) and utility exposure (TA) but I'm looking to get some oil sands exposure in the next couple of months in case the middle east heats up a little bit.

Causalien, what are some stocks you write options on? I want to get up to about 5-10 that I'm comfortable with holding and familiar with in all respects.

 

Same as my investment portfolio. It saves me time on analysis. Some of the more notable investments that I am more sure of I post here. I usually write them until volatility dies.

I don't mention some of the stocks because they are pretty boring. Take V for example. Writing option for it has become completely unprofitable recently.

 

Of my holdings, only TA isn't worth writing options on. I might look into writing 6 month options but nothing shorter than that has much upside. Would be good to squeeze out a couple % above and beyond the 6% yield though.

TA is a stock that I wouldn't care if it never appreciated, as long as the dividend remains stable.

 

My Telus puts expired just out of the money. $56 strike, stock closed at $56.02 on Friday.

Rolled them over again today with 5 April $56 puts. Unfortunately I missed a couple key opportunities to maximize my premiums. I hesitated to sell on the news of their consolidation of voting and non-voting shares. Wasn't sure what impact that would have on the voting shares which trade at a premium.

Shares were trading right around $56, so options premiums were much higher. Also bought too early in the day today, while the underlying was trading just below $57. Had I waited I could have made ~$20 more per option sold.

Anyway, sold 5 puts for $0.95 each for $459 net after commission. Also transferred $5k to my account to clear up my margin.

No exciting dividend income likely this month, and the options premiums are down a little from January.

Need to figure out what to do with my 10 March TLM calls. Strike is $13, stock broke through $14. Any advice from Causalien or the other options guys?

 

For February I increased my net worth by 6.34%

Assets
Cash: $4,127(-41%: $5K invested in non-registered)
TFSA: $23,961 (+4.6%: $1,052 gains)
Unregistered account: $73,612 (+11%: $5K invested, $2,328 gains)
Employee share plan: $2,688 (+34%: $500 contribution, $188 gains - finally got online access, so will reflect market price going forward)


Liabilities
Margin: $0 (-100%: fully paid off)

Net Worth
$104,388 (+6.34%: $6,221)

Broke the $100K mark, so far up $9,500 for the year, so on good pace to break through my $150K target.

If the market keeps going the way it is for me, I'll likely do a little better than I had hoped for (provided bonus time is as generous as expected).

Net dividends after margin interest were only $92 for the month. February is very light.
Options premiums for the month were $734.
Total portfolio income was $826.

I rolled over my TLM March calls, didn't have fantastic timing with the transaction though. Bought back my calls for $1.10, wrote September $13 calls for $1.80.

Unfortunately I was busy throughout the day when I wanted to execute the trade, so I ended up buying back the calls when TLM was trading slightly over $14, and selling the next round of calls when it was trading at around $13.75. Ideally, both transactions would have been closer together. I estimate it cost me around $300-400 in lost options premiums.

 

I guess I'm gradually learning the value of patience. Had I waited to roll over my TLM position, I would have made ~$400 more.

Lesson learned: set out a strategy and stick with it.

Rough day in the market all around. Only bright spot is the 6% increase in BNS dividend.

 

So...I see 2k made from investment. 4k is new money? Is this a locked down portfolio or are you contributing?

Nothing I could say about TLM. Was on vacation.

 

Total of ~3.5K in investment gains for the month, the rest is new money. I try and contribute savings every ~2 months or so, while keeping about $3,000 in the bank to pay the bills.

TLM was a case of acting too soon initially (saw it at $14, felt I had to do something with my $13 strike price calls) but not acting fast enough (was really busy with work so put in a limit order to buy back my calls, but didn't write the new calls in time).

Not the end of the world, but I made ~$700 instead of >$1000 on the transaction.

 

Total of ~3.5K in investment gains for the month, the rest is new money. I try and contribute savings every ~2 months or so, while keeping about $3,000 in the bank to pay the bills.

TLM was a case of acting too soon initially (saw it at $14, felt I had to do something with my $13 strike price calls) but not acting fast enough (was really busy with work so put in a limit order to buy back my calls, but didn't write the new calls in time). nội thất văn phòng

Not the end of the world, but I made ~$700 instead of >$1000 on the transaction.

To keep a high premium that I like to generate the type of % income I want, I dabble in low volume options of stocks that are not covered by the media. Now that things have grown and I have to expand, I am bumping into liquidity problems.

 

I've recently run into limits of this strategy.

To keep a high premium that I like to generate the type of % income I want, I dabble in low volume options of stocks that are not covered by the media. Now that things have grown and I have to expand, I am bumping into liquidity problems.

So I either have to 1. invest more time in researching another stock symbol or 2. take up a higher volume but lower premium stock.

I don't see the 25% per year return continuing, but I will try.

 

Do you not find that even the higher volume stocks provide similar returns? I would have thought the increased liquidity in higher volume stocks leads to tighter bid ask spreads, and easier entry and exit of positions.

So far, my average potential total annualized gain is over 40%... too soon to say what my actual results are/have been.

 

I find that higher option liquidity usually leads to lower premium overall (low volatility). The tightening of the bid ask spread is only good if you are very actively trading it. For this strategy, I don't do that.

 

Congrats on breaking the 6 figure level man, that's awesome!

 

Thanks it feels good. The $150K target is next, ideally by Dec 31 this year. I figure if I can add $50K in my younger lower income years, as my career progresses and my portfolio returns contribute more on an absolute value, I should be able to increase annual growth significantly.

Hope all goes as planned.

 

Remind me to discuss this $100k level with you again in say... 3 years.

 

Gladly... let's just hope it's from a much higher vantage point in 3 years. How long have you been selling options? What kind of returns have you managed consistently? ($ or %)

 

Thanks for the input caricole, and welcome to the forum and this thread.

I have heard several variants of the option writing strategy. Most seem to recommend buying back options and rolling out the term, but some say to just let them be assigned if the price runs up. I'm new enough that I'm willing to try both ways and see which I like most.

I use my margin very sparingly, but when the opportunity is there, it's good to have the ability to access extra capital. I also take the buying one step further by selling puts on stocks I want to buy. If I get assigned, I'm happy as I get the stock a little cheaper, and if I don't get assigned, I get the premium with no capital outlay (secured by margin, so it's pure return).

I'm not expecting this strategy alone to make me rich, but I definitely hope it contributes to that end. Even just a couple percent of excess returns can make a HUGE difference over the long haul. Since I have decades ahead of me, hopefully it all adds up.

I also love the recurring income this strategy generates, above and beyond what a dividend only strategy could.

Do you mind sharing which equities you use with this strategy?

 

I have heard several variants of the option writing strategy. Most seem to recommend buying back options and rolling out the term, but some say to just let them be assigned if the price runs up. I'm new enough that I'm willing to try both ways and see which I like most

1) Those who recomend buying back are the TRADERS, BROKERS, MARKET MAKERS and the teachers who never invested or trade.....it pays them

2) You do not have to try it out....observe the spread at expiing date (next friday) of the options IN THE MONEY....the price of the last tade during the day and the ASK for that option in the money at the same time of the day

3) Here the cost of a run per share....
500 shares....commission 10,00$ = 2 cents
5 options .. commission 16,50$ = 3,5cents
Exercise 500 shares........46,00$= 9 cents
total.....................................= ±15 cents /share

You will SEE how much the difference ...in real time a any time of the day the spread is on the option ASK side

Here what I do if on Friday afternoon...14h-15h it looks my option sold will expire worthless

I Sell a covered call further down the road immediatly....and stay DOUBLE covered for an hour or two

The reason....that option I sold on friday afternoon will drop by 10, 15, 20 cents next monday morning

One other observation

The marketmaker will take the price of the stock at expiration (16H) to the point where the MAXIMUM OF OUTSTANDING OPTIONS EXPIRE WORTHLESS

Next Friday,between 15H and 16H15....you should be in front of your computor and OBSERVE...you will learn more than was ever TEACHED

Ps:
If I can DOUBLE the yield of a good divdend paying stock by selling covered calls....that satisfies me...altoug a better return is always welcom

 

The marketmaker will take the price of the stock at expiration (16H) to the point where the MAXIMUM OF OUTSTANDING OPTIONS EXPIRE WORTHLESS

This is called max option pain. Be very careful not to blindly follow this and do the due diligence of going back through the dates and see whether or not the Market Makers actually sold or bought.

 

..Dmoney..Do you mind sharing which equities you use with this strategy?

I wont say what I HAVE, HAD, or just LURKING AT....But these a worthwile in my eyes to be at least in a WATCHLIST...and there are others of course

Requirment: Paying reasonable dividends ( exept the Ishares ETF) and OPTIONABLE
BCE..Bell
BNS..Bank of Nova Scotia
MBT..Manitoba Telecom
NA...National Bank
EMA.....Emera
FTS ...Fortis
SLF...Sun Life
T...Telus
TA....Trans Alberta
TRP...Trans Canada pipelines
XIC...Capped Composite Index
XFN...Financial
XSP...S&P 500 Index

 

Those are all stocks I've considered. I find TA, FTS, TRP have very small options premiums, so almost not worth it. You give up pretty much any capital upside to get a small premium.

Currently writing on BNS, T, TLM (a little too volatile for the strategy perhaps) and am looking to add maybe 5-7 more. Don't wan't more than 10, but want to have enough diversity amongst holdings.

 

For March I increased my net worth by 2.89%

Assets
Cash: $5,703(+38%: Will likely invest $5K after my next pay cheque)
TFSA: $23,731 (-0.96%: $229 in losses, mostly on TA-T down a little)
Unregistered account: $75,023 (+1.92%: $1,411 gains. Happy considering the market was all over the place.)
Employee share plan: $2,950 (+9.74%: $500 contribution, $238 losses)


Liabilities
Margin: $0 (0%: no change)

Net Worth
$107,407 (+2.89%: $3,020)

Stayed above the $100K mark, so hopefully only positive growth from here.
The market wasn't as good as I'd have liked, so mostly gains from dividends and saving for March.

Net dividends after margin interest were only $187 for the month. March is a little better than February, but April should be $350+.
Options premiums for the month were $515, since there was very little activity. In April my T-T puts and my BNS-T calls expire. T-T I will hopefully roll over for ~$600 with a 1-3 month put. BNS-T, if I am assigned I will write a short term put to try and get it back. Otherwise, I will write another 1-3 month call for another ~$600 hopefully.

Total portfolio income was $703, short of my near term goal of $1,000. Aiming for at least 4 months over $1,000 this year (January, April, July, October), when my bigger dividends give my option writing a boost.

 

Real estate investment: Worth the hassle?

I've been giving some thought to direct real estate investment and am wondering if the returns are worth the added hassle. A colleague of mine has a few properties in London, ON and is getting double digit ROE. The issue is that the equity is fairly small, and a few hundred $$$ a month of cash flow/equity paydown is likely not worth the effort. Particularly as he lives in the GTA and has to travel to London (or his partner does) if issues arise.

Just running through the numbers myself on a few properties currently listed in London, ~12% ROE seems very attainable.

Rough numbers as follows:

$280,000 property
$224,000 mortgage at 3.5% (80% LTV, conservative mortgage rate assumption)
$56,000 equity

5 rooms at $400/month net (assume tenant pays utilities - looking at Kijiji London room rentals seem to be in the ~$450 range all inclusive)
$2,000 net rent/ month
$24,000 annually

$7,840 mortgage interest
$2,800 taxes (assume 1% of purchase price, likely to be lower than this)
$1,200 vacancy (5% vacancy assumed - might be higher depending how well managed)
$5,600 maintenance (2% of property value. Have to assume would be quite a bit less if less maintenance is done, or if it is DIY)

$6,560 net for 11.7% ROE

Are these assumptions reasonable?
Is it worth the risk and hassle for $6,560/year?
I'm sure with good property selection this ROE can be increased to the ~15% range.

What would it take to make this a worthwhile *Full-time* business?
In the above example, even 10 properties would only net $65,600/ year which is less than I'm aiming for by a long shot. Would also tie up $560,000 of capital at this leverage level.

Part of me looks at the ROE and says that even without any price appreciation, the math looks fantastic.
Part of me looks at the bottom line ($6.5K/year) and says that the hassle isn't worth it at the beginning with just one or two properties.

I can make far more just by working my day job in the near term.
However, the long term value of this strategy is what's truly enticing.

Assuming the math works out, the tenants are paying all expenses, and based on my savings rate, I could save a 20% downpayment every 2 years quite easily.

Has anyone dealt with student housing before?
How does the math work?
Is it worth the hassle while working long hours at a full-time job?
How high can it be scaled up? (10 properties, 20 properties, 50 properties)

If I look at this strategy over 20 years, I assume I'd end up with 5-10 fully paid off properties, valued at a conservative ~$300,000 each (not allowing for much appreciation). Not a bad retirement plan in my books.

Thoughts anyone?
Particularly those who have done/are considering doing this?

 

Real estate investment: Worth the hassle?

I can make far more just by working my day job in the near term ...

Has anyone dealt with student housing before?

lol it reminds me of actor donald sutherland's story about the first advice he ever got from high-powered US financial advisors after he became a bigtime US movie star.

they analyzed his situation. Sutherland was living in hollywood. He went back for the 2nd appointment, the one where they would hand him the Grand Design & tell him how he could stay rich forever.

from a tax perspective, you have only really got 3 choices, they explained. It's oil wells. Or railcar containers. Or slums.

so we're putting you in slums, they told donald.

 

Tried to find any reference to the above Humble, but was unable to.

The advice was probably sound though.

It seems like slums/student housing etc. is EXTREMELY profitable from an ROE perspective, but it's also extremely difficult from a management perspective. It's possible to live for free in a respectable house if you fill the remaining rooms with students. They'll not only pay off the mortgage, but you'll live rent-free and you may have some cash flow left over.

$300,000 mortgage can be had for less than $1,600/month, rent is easily $2,000/month plus utils in this kind of house, plus take a room for yourself at no cost.

The problem is growing this business model. Turnover is very high, and it's harder to monitor a place if you're not living in it.

 

I accidentally stumbled across a site called today called condos.ca and am happy that I found it. They let you see historical average prices per square foot of specific buildings. For now they seem to only operate a database for TO and a lot of places are missing. Afaik MLS require people to privately query past solds for this kind of info (pretty opaque process). I am guessing that is what this site does, manually adding each and every address to a program that will do scheduled queries and parse out relevant info - price data, transaction volume. It's pretty unique so I hope it doesn't get shut down or something.

Some examples
http://condos.ca/condominiums/toronto-no-10-bellair-10-bellair-st#trends - volatile looks correlated to equity market
http://condos.ca/condominiums/toronto-graphic-arts-building-73-richmond-st#trends - volatile super low volume
http://condos.ca/condominiums/toronto-the-metropole-7-king-st#trends - powered by momo
http://condos.ca/condominiums/toronto-optima-city-place-81-navy-wharf-crt#trends - powered by momo
http://condos.ca/condominiums/toronto-1-king-west-1-king-st#trends - total disaster, original owners underwater after dev miscalculated expenses for building insurance among other stuff, consequently wears the highest psf maint fee in the city

If you look back 10 years it was "hard to go wrong" purchasing anything, prices were reasonable, you could easily get a high return, sometimes double digits renting to people staying extended periods for business, local workers or families with little credit risk etc. Now punch bowls are sitting around the room and everybody has had one too many sips it's hard to say the same thing.

 

Seems that the realtors have access to a huge database of information that would be very valuable in the general public's hands. Would be fantastic to see this monopoly dealt with. Need some competition from some entrepreneurial individuals on the inside who can make this widely available without the need for a binding buyer's agreement or other realtor nonsense.

 

If you decide to get into real estate (and eventually own several houses) I strongly suggest you get a reliable property manager. Doing it yourself is a huge inconvenience especially if you have other employment. I'm not positive but I think the cost would be about a month's rent for each house managed, so it would reduce the gains but still offer good returns and the value of your time saved would be priceless, especially with student housing.