AltaGas Ltd T.ALA

A strategy during the Waiting Game

[Johnwith30years]

Thi sstrategy may appeal to very few yet I find it a way to double the dividend equivalent on any positions I do it with .

I sell oprtions agains a portion of my holdings when I think ALA is in the dolldrums waiitng for events or new earnings reports etc.

 SO on a regular  basis I pick up .0833 per stock each month.  I can usually quite easily generate that much or more by selling options - For example Just between today and Nov 19th I picked up 12 cents per share with a promise to sell my stock by November 19th at a price of $26.00.  Now I have no intention of letting my stock go for $26.00 as I am convinced I will see higher prices ahead.   So  if the stock closes below 26 by November 19th  I just pocket the option income of 12 cents  as well as the Next dividend of  8.33 cents and perhaps even sell the next date option of Nov 26 or December 3rd to repeat the whole process.

However should the stock rise in price to say $26.30 by the 19th.  I simply buy back the option  which is now worth 30 cents or on paper a 18 cent loss.

However at the same time I roll out and sell options further out at a price worth more than 30 cents or perhaps at 15 cents but now double the number of contracts I sell.  
One cn actually set the price when one is going to sell a stock as in 28.50 or whatever you choose and figure out how many rolls and time it may take to get there.

This strategy works great in a flat market, helps you out in a down market but prevents you from maximizing your profits when the stock suddenly jumps.

As the next earnings report date gets closer I often ease up on the number of contracts I sell to not miss out if there is a nice price jump.

You need to be willing to be actively managing your account and also to be satisfied with a known increase in your portfolio - not be wanting to hold out to go to the moon.  BUt investors are not buying ALA expecting to go to the moon  rather steady income and stock appreciation.  

You should also hav ean account where option contracts are low.  One contract equals 100 shares so you need a certain volume of shares in your account to make this really work well.

You also need a security that you are confident will grow over time and that youare not going to or at least planning to sell during the period you have option obligations to sell your shares at a certain price by a certain date.

Ove r the last several years this strategy has greatly enhanced my portfolio.
You may find it too much work and you may prefer to try timing the market to buy in and out on price jumps and dips - but I find that method largely unreliable so enjoy the challenge and profits of this partial position covered call strategy with roll out and up as needed.      GL Cheers

[OOOOMM]

Appreciated JW30years! Looks like a bit of a learning curve to get going. ALA looks like the perfect play for this strategy. Can you share your returns in percentage say over the last year or two.

[nitehawk66]

l do disagree with you , you are yo yo trader, you are not investor, its better to invest for long time, unless you are too old in top of ladder, though l would not do that to play with my nerve, l see you preach like Mr perfect, perfect people are in mental home, that why they do think they are perfect, you are so damn perfect you cause bushman to be suspended, l have no respect for rats nor

[Johnwith30years]

Hi There: I really can't break it down in detail until tax time  as it is really complicated given open positions where you show a temporary loss on one set of options that will turn into a profit when the next set expires.  But my TD account indicates that stock and options combined I am up 65.10% in the last 12 months and 45.7% Year to date which is due of course to the nice

[Undertaker]

This post has been removed in accordance with Community Policy