Sept 18, 2024 Newsletter

By | December 1, 2024
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ALERT NOTIFICATION – EXTREME DIVIDENDS

Hi Everyone

With ULTY we have 3 opportunities today before the Ex-Dividend clock runs out for one of them at 4:30 EST when the market closes:

  1.         Own or purchase the shares 
  2.         Play the same game the experts you are investing in play
  3.         Wait for a potential price drop

Here’s what to expect:

  1. With your current or new shares: 
    1. A payment into your account by Monday or Tuesday – the payout process starts this Friday.
  2. Playing the experts game:
    1. The reason we play:
      1. Often large groups of stupid people bail out at market price right after ex-dividend dates and earnings announcements. this causes market overreactions and losses for then and opportunities for us. When something is driving the market or a stock more people are motivated to buy and the price climbs.
    2. How we play:
      1. If you think the price will drop as it often does after the ex-dividend tomorrow,  you could sell a mid Sep (expires this Friday)  $11.00 call option against your new shares for $0.45 to 0.50 /sh. The benefit is an extra $45/100 share lot on top of the $98 you will collect from the dividend. The risk is you will lose $30/100sh by having the stock called (bought away from you at the strike price) if the stock doesn’t drop to $11 by Friday’s close.
      2. An alternative would be to buy a September $12 Put – $12 price insurance if you think the price will drop.
      3. On the other hand, if you think the price will climb and you are willing to buy more shares, you could sell $12 October 100sh puts for between $155 and $270 which if ULTY is below $12 by mid October, commits you to buy 100 sh at $12 if the market is below the strike price.
      4. If by mid October, the market is above or equal to the strike price, the option expires and the money you collected is all profit.
    3. The bottom line:
      1. Although a little hard to comprehend at first, Profits from option wins in either case, grows your net dividend profitability significantly, and the risk in either case isn’t necessarily a loss as you still make money, or buy more stock from which you will collect more potentially high dividends and from which you just collected decent money for selling the option. This amazing profitability is why we invest in companies like YieldMaxETFs and others in the first place.
  3. Looking for the lower price point and purchase:
    1. By the close tomorrow wait and buy cheaper shares. We can then sell call options against these shares. 
    2. As long as the call options don’t expire before the next ex-dividend date, we collect another payment.

Insight:

So we have a set choices to make between simple and/or complex trades. Sometimes, and at increased risk, the complex part of these trades can greatly enhance our profitability. Is it worth the effort of at least getting familiar with adding option plays to our investing, and is it worth getting our toes wet?????? I will start adding option plays occasionally if there seems to be an opportunity if any of you are interested.

Good luck

Clint Fruitman