Am I missing something? Magnifying dividend payment on margin. Safe and profitable?

Discussion in 'Stocks' started by pan, Mar 26, 2010.

  1. I'll just add my 2 cents since this is basically what I do in my journal titled investing juornal - T2S.

    I did about 32% last year, where the market was flat. However I am adding an additional leg of complexity and selling calls. So I am margining on high dividend paying stocks and then in addition I am selling calls. I had a nasty drawdown in the august plummet where my account dropped 25%. However, since then I am making new high watermarks everyday. EDIT: I am 8% higher now then the end of July highs.

    I have only been doing this for about 8 months and here's my take. It's a great strategy, it can face adversity (the august drop) but you just need to really stick it out and make the right decision. For instance once August happend I stopped selling calls, and when I did start selling calls again I put the strikes out far so I could appreciate back to where I was..it worked out for me.
     
    #21     Jan 3, 2012
  2. The august drop is when you should start this strategy. It is the ultimate buy the dip strategy.
     
    #22     Jan 3, 2012
  3. I agree, However the strategy was already in place :) regardless I made out okay doing 32% last year
     
    #23     Jan 3, 2012
  4. orimsh

    orimsh

    T2S,

    Can u explain please more in details the strategy?
     
    #24     Jan 3, 2012
  5. Well i've posted all my trades real time in my journal but basically i pick stocks i really like that offer 3%+ dividend and sell calls on them.

    I generally want to be in 3-5 well selected positions, but right now my entire portfolio has been in MSFT since 24.88 including 2x margin, because I had strong conviction MSFT would be on the upswing. Once I close out this MSFT trade I will add likely some drug companies.

    Basically I take low beta stocks with good yields and margin out and sell calls, it's been great out performance so far.
     
    #25     Jan 3, 2012