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Adjusting The Synthetic Dividend Growth Portfolio

Friday I adjusted the portfolio by rolling short calls expiring in October and November out to January and February. Trading calendar spreads in very small size, I was gratified that market makers for the most part met me close to mid bid/ask. I started there and kept lowering my limit until they filled.

Before trading, I verified that the premiums received for the approximate 90 day increase in the time to expiration, when multiplied by four, were greater than the annualized dividend for owning the stock. Portfolio strategy attempts to earn options premiums equal to or greater than the dividend income for the underlying.

Going forward, I plan to roll December expirations out to March when they become available, and continue to roll out as new quarterly options start trading. The thinking is, by selling more distant expirations, I've locked in the premium income. Also, by doing the rolls on a monthly basis, the overall work is reduced since I don't have to think about it at other times.

There were a total of seven trades involved, a couple of hours to get them all entered and closed. Both realized profit(loss) and premiums received for the roll were consistent with a 4% return on the hypothetical $250,000 portfolio amount.

There were no adjustments to the long positions. The plan is, to adjust when the underlying moves 10% either way, by rolling in the same direction. By putting the starting prices of the underlying into a portfolio here on Seeking Alpha, I can check for the % change when I'm on the site, and deal with any that change by 10% or more.