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Strategies & Market Trends : Dividend investing for retirement
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Recommended by:
Jim P.
Road Walker
To: Ditchdigger who wrote (16708)8/20/2013 3:38:16 PM
From: E_K_S2 Recommendations   of 34328
 
Re: SFL

I covered some naked Puts I wrote last time the stock traded below $15.00/share. I bought them back earlier this month for a 50% gain. I want to pick up more shares now at any price below $15.00/share. I also closed my covered call position for a small profit too so just holding the shares. The Schwab StreetSmart Edge program has an option module that allows you to plot the IV (Implied Volitility). You want to sell naked Puts and/or Covered Calls when the IV is tracking high.

SFL typically cycles through a very high IV right before earnings. The time to buy shares is when it is at/near it's low and the IV is low. Since their dividend is declared sometime around their earnings announcement, it's probably not a good time to buy the stock to capture the dividend. The IV is the lowest just after they go xdiv. Therefore, this is a good one to either buy more shares the days/weeks after they go xdiv and/or write some covered calls before earnings but out long enough to capture one or two dividend cycles.

Now, I am hoping to catch this one at/near lows again to buy more stock and/or write some naked $15 Puts for $1.50/contract or more. It continues to be an excellent dividend payer (a qualified div too) with a 9.9% yield at the current price. You really can not beat that w/ the associated risk profile which to me is low.

EKS
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