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My income statement

156K views 460 replies 44 participants last post by  Thal81 
#1 ·
My main investment goal is to boost my "passive" income over time, so I'm going to try to post monthly charts showing the growth in my portfolio income.

My strategy includes long positions in dividend paying stocks, covered call writing and cash secured (or margin secured) put writing. Going forward I'll adjust my strategy as I see what works and what doesn't, and as I learn more about options and the market in general.

For record keeping, I record dividends when they appear in my account, and I record income from option sales on a straight line basis over the life of the option (If I sell an option on November 30 with a January expiry, the income is proportionally attributed to December and January).

If I sell an option or it is exercised for a loss, I'll count it against income if and when the loss is realized (ie if I sell a put and it gets assigned for a loss, I hold and sell calls so income continues to flow. If a call is assigned below the strike price of the assigned put, the difference will count as negative income).

I've been recording dividends since March 2010 and Option writing since June 2011. Hope this gets some interest and generates some discussion.




Here's where I stand currently. I'm looking to grow both my option and dividend income substantially over time.

Also, what's the best way to get charts/graphs from excel into a post?
 
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#131 ·
Positive sentiment following FTT`s investor day. All guidance was in line or above expectations, brought stock back above $24 in the past couple of days. Timing could not have been better, as I have 20 short puts expiring next Friday with $25 strike price. Hopefully between now and then the stock price stays stable or rises a little.
My choice now is to allow assignment and write the call (likely the June $26 strike for around $1.00) or buy back my put ($1.20) and sell $25 puts in June ($2.60). One option will draw down my margin by $10K at 5% interest, and will let me deploy $40K that is currently doing nothing. I also get dividends (2.5% annual yield with the covered call strategy). Selling the put will mean no margin needed, savings of a little under $50 per month. The commission is roughly the same for both alternatives.

Any input?

ESI has also landed itself comfortably above my Jan $15 short puts, so hopefully it doesn't climb too much or fall again. Not going to deal with it until after FTT is sorted out. Looking like December will end my year on a positive note.
 
#132 ·
FTT puts assigned at $25, stock closed at $24.50 Friday. In a pretty solid position right now, will probably sell the covered calls on Monday. March $25 strikes or June $26 strikes both look decent. Will spend some time looking at payoffs on Monday.

$50,000 of margin used for FTT shares, have put $40,000 into the account, so margin will be $10,000 for now, minus probably $2,000 when I sell FTT calls, and will hopefully have another couple thousand to put down after mortgage payment goes through at month-end, and I get paid the following day.

Big gains so far in December in my unregistered account, recovery of FTT, ESI and BNS all positives. Good to end 2012 on a positive note. Looks like I'll be well above my $150K target by year end, close to $155K I think.
 
#133 ·
dear boy here's my input. It's christmas, you've just bought a smashing house. I don't want to hear how you are sitting in the root cellar counting the beans at the end of the month. I want to hear how you are whooping it up riotously on The Property.

i want to hear how you put up coloured lights, some real cedar boughs, overtipped the movers, got drunk on eggnog, invited the parents to come admire the new dwelling.

i want to hear how the parents fell over themselves & got all choked up with pride in their wonderful, talented young son. I want to hear how the friends came by like wise men bearing frankincense, fruitcakes soaked in brandy, a feathery light new duvet for the bed, a reel lawnmower for the backyard next summer, a giant Norfolk pine hung with a few xmas decorations in a flowerpot.

just once, i want to hear you doing insane, cuckoo, joyous things. Then on new year's eve, on the stroke of midnight, you can of course turn back into the bean counter.

ps c'est du tonnerre. Mille félicitations.
 
#134 ·
Back in the old hometown for Christmas, left the new home in the care of the lovely new neighbours. The coloured lights are up on a timer, and the whooping and insane cuckoo joyous revelry is all taking place in my old stomping grounds.

Thank you for the congratulations, we'll spend a little more time showing off the new place to friends and family in the New Year. Calls for a hearty housewarming celebration to break it in. I don't think there'll be any counting after we get to 0 on the stroke of midnight... I don't plan to be in counting shape at that point of the night.

Merry Christmas to all...
 
#136 ·
Wow... starting the new year off with a bang...

Get back to the new house after visiting the folks for the holidays and the place is freezing... furnace died while I was away. The fan on the motor blower needs to be replaced, got it running temporarily but having the serviceman coming tonight to replace it so this doesn't become a recurring problem. Will set me back ~$200-400, the joys of home ownership.

Was 40 degrees when we got home, which was a lovely surprise. Up to 50 now, and climbing, so all is not lost.

Will post a full update later, see what kind of damage the holidays caused.
 
#137 · (Edited)
Great month, excited to see months in which I make more from investing than income.

Overall net worth up 8% ($12,139) $163,312

Assets:
Cash: -80% (-$37,667) - Put excess cash into investment account to cover margin
Unregistered: +61.5% (+$46,331) - $40,000 cash contribution, $6,331 in gains. Great month, mostly up across the board.
TFSA: +1.7% (+$389) - Not much movement
ESPP: +41% (+$2,333) - Stock up quite a bit, $500 contribution

House: $603,000 - (Acquisition cost)

Liabilities:

Mortgage: $602,250 - (-$750)

$6,620 of margin is included in my calculation of unregistered account.

2012 was a great year financially, and overall. Got a raise, bought a house, girlfriend graduated and got a job, career progressing well.
Achieved my goals for the most part, CFA didn't happen... laziness happened instead.

Net worth target: $150,000 - Ambitious but a few things should hopefully get me there. - Exceeded target by $13K, now at $163,312
-I will hopefully get a raise sometime in the first half of 2012 - Got a raise, as I had hoped for, helped net worth
-Two semi-annual bonuses, which if the past is a good indicator should sum up to roughly my base pay - Bonuses were as expected
-The girlfriend, who I live with, hopefully finishes school and gets a job, should let me save more - Girlfriend got a job, working towards paying off her student debt. Looking for better work in the new year, will hopefully have some luck.

Savings targets:
-50% of after-tax base pay (~3,700/month, so save $1,850) - After tax base pay has increased - earned about $47K base pay - saved about $27,600 or 59%
-100% of bonus pay - Saved full after-tax amount of bonuses

Other goals:
-Might look into getting my CFA designation - Lazy this time around - didn't get around to it
-Will keep myself open to buying a house or condo in the New Year, but no desire to rush it - Guess I rushed it... bought a house late 2012
-Get back into shape - hit the gym a minimum of 3 times a week, no excuses On and off for much of the year, for the past month and a half have been going 4-5 times a week. Not quite where I want to be, but getting there.

2013 goals to come...
Happy new year
 
#138 ·
Will set out some 2012 stats and 2013 financial goals.

2012 dividend income - ~$4,100
2012 option writing income - ~$12,500
2012 portfolio income - ~$16,600

2013 portfolio income target - $21,000 ($1,750/month average) - Would love to hit $24,000 but that may be a little lofty. I don't really care whether it comes from dividends or options, as long as it comes.

Year-end net worth - $163,312 up $68,450 or 72% for the year.
2013 target - $235,000 - a $71,700 or 44% increase - Manageable assuming salary/bonus remain the same and portfolio income is stable. Relies on decent investment returns as well.
 
#140 ·
... was put 1000 TLM shares at $13.00

dmoney i am wondering why you didn't skip out of the way before those puts were assigned

in late dec/12, it was transparently clear that talisman jan 13P were at risk. Would not a good treatment have been to buy them back in late december for a 2012 tax loss - always useful when one has gains - then resume selling em again in 2013 ?
 
#141 ·
I probably should have rolled over the puts, no question they were going to get assigned as December wore on. I'm still new enough to options, and this strategy that there are kinks to work out, and as time goes on, I'll try and optimize trades with a more complete view to their impact (tax implications, commissions, interest expense if it will force me on margin etc.)

Once I do my taxes this year, I'm sure I'll find a number of trades that could have been better executed from a tax perspective.

From a tax point of view would the idea be that I close all losing positions to get a 2012 tax loss, then re-enter the position, or a similar position, immediately?

For my losing positions, I find myself trying to salvage with ever-longer term options, rather than closing for a loss. Might have to reexamine this approach
 
#142 ·
From a tax point of view would the idea be that I close all losing positions to get a 2012 tax loss, then re-enter the position, or a similar position, immediately?
i'm glad u will be thinking about the tax implications ! because you will have very good insights, i'm sure.

i don't believe one can categorically say "close all losing positions" to realize a tax loss. I think better to examine each option on a case-by-case basis. In late december each year, it will inevitably turn out that some can be bought back without rolling over at that very same moment, in order to realize tax losses.

the issue of when to sell the next rollover position in the sequence is a bit opaque i think. It's black-&-white clear that one does not sell until the following taxation year. In options, from a technical point of view, some might do this as quickly as 24 hours later, as long as one straddles the new year date. That is, theoretically speaking, one could sell an option on 31 dec for settlement on 2 jan of the following year.

we come now to a clouded issue, which is taxation of options trading in general. Dmoney an option trader can consult 5 distinguished national accounting firms & each will have slightly different advice - along with possible bills of 5-10k for their expert research & conclusions. At the end of the day, each option trader should follow a scrupulously consistent & reasonable procedure. I do. Could i underline those words scrupulous & consistent.

this is why i'm careful to capitalize - ie wind up & close out - just about every option position.


For my losing positions, I find myself trying to salvage with ever-longer term options, rather than closing for a loss. Might have to reexamine this approach
there are always so many tiny little decisions to be made. One trend that makes buying-back-for-a-loss in late december together with selling-new-position-for-a-new-gain in january or february work out well is the well-known january bull market phenom. But one must keep in mind that there are years when this phenom does not materialize.
 
#143 ·
Will be doing my own taxes this year, so will be a bit of a learning experience. Should allow me to see where I could have made more money, where I did well.
I'll probably find that I could have closed several positions with better outcomes from a tax point of view, which should allow me to tweak my strategy going forward.

Either way 2012 was a good year, no use sweating over results that can't be undone. Learn from mistakes and move on.
 
#146 ·
Very well so far, though the options I don't quite consider as passive as the dividends.
$632 of dividend income in January, though I'm averaging about $360/month for the full year at the moment.
Total for 2012 was $4,132, looks like it will be more in 2013, depending on what I hold onto, and what gets called away. I think I'll likely try and roll over most of my covered calls though, so hopefully hold most of them.

Total portfolio income for 2012 was $13,700 factoring in options, but I don't consider that income as clean as the dividend income.
 
#145 ·
Another good month, a little surprising as I had a few house related expenses... joys of homeownership.
Switched to bi-weekly mortgage payments, nice to see the principal slowly working its way down.

Overall net worth up 6.7% (+$10,092) $173,404

Assets:
Cash: $8,336 (-$1,048, -11.2%)
Unregistered: $129,547 (+$7,868, +6.5%) Another great month, everything was up, including TLM and FTT which were assigned to me
TFSA: $24,658 (+$1,119, +4.8%) TransAlta posted a bit of a recovery
ESPP: $9,306 (+$1,349, +17%) Company's stock is recovering, plus the standard $500 contribution

House: $603,000 - (Acquisition cost)

Liabilities:

Mortgage: $601,450

$16,795 of margin is included in my calculation of unregistered account.


Also sold another 10 covered calls (June $13 strike) on TLM for $0.58... really need to do a better job with my timing as the stock ran up by a further 2% today after I sold options.
 
#147 ·
Assets:
Cash: $8,336 (-$1,048, -11.2%)
Unregistered: $129,547 (+$7,868, +6.5%) Another great month, everything was up, including TLM and FTT which were assigned to me
TFSA: $24,658 (+$1,119, +4.8%) TransAlta posted a bit of a recovery
ESPP: $9,306 (+$1,349, +17%) Company's stock is recovering, plus the standard $500 contribution
Dmoney, it seems you don't have an RRSP.
Any reason why?
esp. since you seem to be selling so many covered calls, which are allowed inside RRSPs.
That will shelter the option sales income from taxes, in addition to the usual benefits of an RRSP.
 
#148 ·
Haven't been earning enough income to date to make it worthwhile. I expect to be in top tax bracket in retirement, and am just scraping the bottom of the top bracket now.
Also didn't have enough contribution room until this year to justify setting up another account.

The tax-free growth is appealing though, and I may contribute this year.
 
#149 ·
Overall net worth up 2.3% (+$3,976) $177,380

Assets:
Cash: $8,38 (Flat)
Unregistered: $132,233 (+$2,686, +2.1%) Weak dividend income as February I only receive monthly payments. For the most part good gains in underlying stocks were offset by my covered calls option positions. Starting to see the only pitfall of my options strategy play out on a few positions. Got BNS covered calls at $56, stock is trading at $61. Still came out slightly ahead of a buy-only strategy, but not by much. Will see about rolling the position over and trying for some additional gains.

FTT and TLM are also both trading near my covered call options, will see how it plays out, but worst case I can pay off margin and start writing puts again.

TFSA: $24,557 (-$102) Need to contribute $5,500 to TFSA, but still waiting for some sort of brilliant idea.
ESPP: $9,886 (+$580, +6.2%) Company's stock flat, $500 contributed.

House: $603,000 - (Acquisition cost)

Liabilities:

Mortgage: $600,603 (-$839) Woohoo... Look at this thing come down!!!

$16,751 of margin is included in my calculation of unregistered account.
 
#151 ·
Thanks, a lot of work goes into growing it.

As for interest rates, my view is that there is nowhere for them to go but up, but I think it will be a slow crawl up and won't start until the US and Canadian economies are on more solid footing. I'm currently in a one-year fixed mortgage, which I intend to roll over until we see interest rates start to increase. A 100 bp increase in interest rates would cost me an additional $300/month, which wouldn't put a huge dent in my monthly net income. I'll lock in five-year financing at some point, but figure in the short term that I'm better off with the short term mortgage and a much lower rate.
 
#152 ·
i know what you mean in bns calls. This is the obverse of the put elephants in aapl. Things get pushed to the lifeboat muster station. It's the reason why i practice a fairly conservative cc strategy, selling calls & puts that are well otm & always hunting for underlyings with enough volatility & liquidity to generate decent premium even at otm strike levels.

bns is not one of these, its options are noticeably less liquid than td, bmo or ry. So in bns i strictly sell puts.

you mention you are short bns 56, although u didn't specify which month. I'm assuming these are aprils or julys. Alas rollover opportunities seem to be disappointing.

i see a couple weak opportunities. You could roll forward to a jan 56 of 2014 (5.40-5.75.) This has the weak benefit of protecting the dividend for a while longer - although not necessarily all the way to jan/14 because the strike is still considerably itm - & could be beneficial if you believe that bns would start dropping by summer/13.

& the others? ok you know about them ... i still think that bns is good for selling puts only, they will roughly track a share price higher, meanwhile seek dividends by holding a canadian bank w more liquid options :peach:
 
#153 ·
BNS calls are April. Rollover options are nearly non-existent :upset:

BNS was my first foray into put selling, got assigned at $56 a while back, and was selling calls on the way down into the low $50's. I liked BNS as a long but it turned down shortly after I bought so had been selling further out of the money calls, not wanting to take a loss. In hindsight options volume should have been a bigger consideration for ease of rolling out of positions.
I'm weighing my options between rolling for very little gain and just letting the call get assigned and going back to selling the puts.

If I'm assigned I pay down $17K of margin at 5% interest and can sell conservative puts for pretty good returns, but I miss out on the dividend.

Do you sell BNS puts? I'm guessing you just roll forward and down as needed if assignment looks likely?
This time around I may do the same... Though I like the dividends, I prefer the options income which is significantly higher...
 
#154 ·
yes i mentioned that i only sell puts in bns, the calls are not liquid enough to manoeuvre easily & do not justify tying up capital in the stock itself imho.

we are coming up to the end-march record date for the dividend. You'll note that with stk at 61.13 & april 56 call at 5.15-5.30, you're only 2 pennies away from risk of early assignment? ie a dividend grab from a counterparty.

you'll also see a large number of sellers offering this option at 5.30, at friday's close.

assuming everything the same monday morning, with same no of sellers back in the april 56, i think it might be possible to buy that back at 5.20. Again assuming the same, one could sell the 2014 for 5.40 or better ... i for one would offer it at 5.50. One could receive a credit of 20-30 pennies per share, although the natural was only .10. Notice there were no "extra" players in this 2014 series at friday's close, only the dealer., which makes it harder.

all this hoo-ha would serve to protect the upcoming dividend, although the downside is that it will tie down capital & margin until jan 2014 or until assignment ...
 
#159 ·
Humble, survived with my position intact up until earlier yesterday (or Wednesday, think there was just a delay in my broker letting me know). Got assigned my 6 BNS calls, so the dividend was sniped.

The options were actually looking a lot better in the weeks leading up to the exercise as the stock had taken quite a hit and I was thinking of rolling my calls further down the road, but decided that I could pay off $17,000 in margin and switch back to put writing if I got assigned.

So, got assigned my 6 BNS calls at $56, sold 10 BNS puts ($56 strike, October 2013) for $1.55.

March looks like it will be my best month yet for dividends... ~$750 for the month. Added $280 from new FTT position, TLM another ~$200 with 3,000 shares, dividend from my company stock, and then the usual monthly guys.
Next month will be light without my BNS dividend, but I won't have to pay margin interest, plus other positions make up for it so it should roughly even out.

Will put up some more numbers later on this weekend.
Dreading it, I think it'll be my first negative month :(
 
#155 ·
I think I'm going to let it get assigned and sell the puts again. I can roll out $56 puts to July for ~$0.60-$0.70 or to October for ~$1.20-$1.30. Provided I don't initiate any other positions, I'm comfortable going up to 10 contracts, from 6.

More imminent now are the 20 TLM March $13 strike call options I have expiring this Friday. I have a lot of options here, might go for the April $13 ~$0.30, gives a nice annualized return, or roll out further to June or September, maybe up to $14 strike.

Everything else is looking in decent shape, no blowups at the moment *knock on wood.
 
#156 ·
Sold 20 TLM calls today, May $13 strike for $0.30
Unfortunately, by being conservative I missed an opportunity to sell the April $13's for $0.40 when TLM was trading at $12.70 late last week.
Also got a little greedy earlier in the week and didn't settle for $0.39 on the May calls.
You'd think with all these learning opportunities I'd stop screwing up :tongue-new:

Also went a little crazy this month... setting up a home theater in the basement which will probably run me $2-3K when it's all said and done... but I'll have a 100" screen with massive sound, so totally worth it. On the bright side, I think my tax refund will more than cover the full cost, so once I get my taxes wrapped up it should even out.
 
#158 ·
I was torn between renting it out or putting in a sweet man cave... You can see which won out.
Gradually putting it together, have the audio, just need to settle on a projector and finish the setup.
Eager to get it wrapped up, but not looking forward to the final bill.
Will have to throw up some pictures when it's done.
 
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