Could It Be That I'm Smarter Than My Broker? [View article]
I would recommend reading the material posted by the Options Industry Council at: http://bit.ly/MqFli0 for educational purposes. They also have a covered call calculator: http://bit.ly/MwByM1
Using Covered Calls To Increase Your Yield: Gravy For A Dividend Growth Portfolio [View article]
depends on your risk tolerance - I would advise looking at the OCC's characterists and risk of options so that you are aware of the risks: http://bit.ly/LJOSNG
one way is to sell puts to establish a potential entry point for the stock purchase.
Using Covered Calls To Increase Your Yield: Gravy For A Dividend Growth Portfolio [View article]
the other side of a trade could be an investor expecting an increase in price and wants to have a maximum loss (which would be equal to the premium paid and comission if applicable) or part of a more elaborate trade such as an investor selling the stock short and buying the call to hedge their overall risk.
Using Covered Calls To Increase Your Yield: Gravy For A Dividend Growth Portfolio [View article]
it also depends if the investor has tax implications (paying the QDI vice capital gains, etc.) and if they are trading in a qualified account or not (may only be able to write covered calls for example)
plus your right - investing behavior has a signficant impact on how risk is view vice the actual risk.
for anyone really interested in trading options I would recommend looking at a discount broker such as interactive brokers or if working with a broker, having a fee based on assets vice paying commission per trade.
Monmouth REIT: An Attractive Triple Net Preferred [View article]
Hi Omaha,
Here's my short answer: Not all preferreds are created equal and rising interest rates will have varying levels of effecting the price on a preferred.
and my long answer: There are different types of preferreds: Traditional Perpetuial Preferred stock (DRDs, REITs, Yankee ADR/ADS); Hybrid/Trusts Preferreds (Trust Preferreds, New Hybrids, Yankee Hybrids); and Other (Baby bonds/Senior notes, Third Party Preferreds, Euro Preferreds).
Each one has various features concerning how its listed on the issuer's balance sheet (liability or equity), remedies for missed payment, if it pays a fixed or adjustable rate (or is a Fixed Rate Adjustable Preferred - FRAP which is a combination of a fixed for an initial period then adjustable, usually a markup over a benchmark rate like LIBOR) and how it trades to name just a few.
These factors will influence what the effect a certain risk, such as rising interest rates will have on the investment price, there are more risks such as credit risk of the underlying company; legislation risk (such as with bank trust preferreds); changes in tax treatment (those that pay QDI - qualified dividend income). Also, an investor needs to take into account their investment time horizon, goals and personal investment personality.
One Man's Search For A Safe And Growing Income Stream - Part 5 [View article]
Hi Bob,
having qualified accounts definitely helps! I wanted to reiterate to be careful when buying preferreds to check their call price. For example there is currently a preferred with a 7.5% dividend yield and is currently trading at $26.26, therefore on March 28th it can be called at $25 - losing out $1.26..
another potential pitfall could be those that automatically convert to common shares - such as there is a preferred with a 10% dividend yield and depending on how the stock will be faring in the near future, may lose a signifcant amount of money when it converts to common shares for an major overall loss.
Its really nice to have diversification by having preferreds and some REITS inside your portfolio.
One Man's Search For A Safe And Growing Income Stream - Part 5 [View article]
Bob,
I noticed someone mentioned preferreds which can provide a potential fixed income stream. Be aware of what their call price and when the earliest call date is. Many of them will have indentures stating that they can be called early if "a Captial Treatment Event" occurs, usually a 90 day window. The Federal Reserve is phasing out Tier 1 treatment of bank trust preferreds which means many banks may be calling in their preferreds between now thru 2015 (and would be considered a capital treatment event).
About 40% of preferred securities pay QDI (qualified dividend income), and dividends will be taxed as ordinary income in 2013, unless new legislation in congress is passed.
I'm not a tax expert so make sure to speak with your tax-professional/ accountant regarding tax implications. For example - for MLPs there are sometimes potential advantages to having them in a non-qualified account but could be additional work having to ensure you have all the K-1s in time to file, etc.
Preferred Stock Investing: The Income Alternative You Haven't Considered [View article]
Why no mention on the phasing out of Tier 1 treatment of bank trust preferreds? Also when evaluating preferred should look at yield to worst (lower of their yield to maturity or yield to call - YTC). It appears many trust preferreds from large U.S. banks will be called from 2013-15 when their Tier 1 treatment phases out.. Some securities have indentures that allow the securitiy to be called at any time after a Capital Treatment Event - which means the preferred could be called prior to their call date..
Staying apolitical: About 40% of all preferreds are qualified dividend income (QDI) eligible. Begining 2013 - dividends are scheduled to be taxed as ordinary income which would be a top statutory rate of 39.6%, Dividends would also be subject to the 3.8% medicare surtax at high income levels, making top effective rate 42.4% (Congress would need to pass legislation to prevent these tax increases).
Congrats to your son being in the Navy - it was a very rewarding time for me and not sure if he's aware of the new Roth TSP option?(http://1.usa.gov/zcJabw)
Even though TSP doesn't match the contribution there was the ability to dramatically reduce expenses and put the majority of my salary towards retirement. Being on deployment for 6+ months at a time gave opportunties to spend very little per month (no need for cell phone, and if you don't have a car - no expenses there, food is paid for, life insurance is minimal via SGLI, clothing is taken care of, kept busy working 16+ hour/day, etc.).
Could It Be That I'm Smarter Than My Broker? [View article]
Could It Be That I'm Smarter Than My Broker? [View article]
Using Covered Calls To Increase Your Yield: Gravy For A Dividend Growth Portfolio [View article]
Using Covered Calls To Increase Your Yield: Gravy For A Dividend Growth Portfolio [View article]
one way is to sell puts to establish a potential entry point for the stock purchase.
Using Covered Calls To Increase Your Yield: Gravy For A Dividend Growth Portfolio [View article]
Using Covered Calls To Increase Your Yield: Gravy For A Dividend Growth Portfolio [View article]
plus your right - investing behavior has a signficant impact on how risk is view vice the actual risk.
for anyone really interested in trading options I would recommend looking at a discount broker such as interactive brokers or if working with a broker, having a fee based on assets vice paying commission per trade.
Monmouth REIT: An Attractive Triple Net Preferred [View article]
Here's my short answer: Not all preferreds are created equal and rising interest rates will have varying levels of effecting the price on a preferred.
and my long answer: There are different types of preferreds:
Traditional Perpetuial Preferred stock (DRDs, REITs, Yankee ADR/ADS); Hybrid/Trusts Preferreds (Trust Preferreds, New Hybrids, Yankee Hybrids); and
Other (Baby bonds/Senior notes, Third Party Preferreds, Euro Preferreds).
Each one has various features concerning how its listed on the issuer's balance sheet (liability or equity), remedies for missed payment, if it pays a fixed or adjustable rate (or is a Fixed Rate Adjustable Preferred - FRAP which is a combination of a fixed for an initial period then adjustable, usually a markup over a benchmark rate like LIBOR) and how it trades to name just a few.
These factors will influence what the effect a certain risk, such as rising interest rates will have on the investment price, there are more risks such as credit risk of the underlying company; legislation risk (such as with bank trust preferreds); changes in tax treatment (those that pay QDI - qualified dividend income). Also, an investor needs to take into account their investment time horizon, goals and personal investment personality.
One Man's Search For A Safe And Growing Income Stream - Part 5 [View article]
having qualified accounts definitely helps! I wanted to reiterate to be careful when buying preferreds to check their call price. For example there is currently a preferred with a 7.5% dividend yield and is currently trading at $26.26, therefore on March 28th it can be called at $25 - losing out $1.26..
another potential pitfall could be those that automatically convert to common shares - such as there is a preferred with a 10% dividend yield and depending on how the stock will be faring in the near future, may lose a signifcant amount of money when it converts to common shares for an major overall loss.
Its really nice to have diversification by having preferreds and some REITS inside your portfolio.
Take care,
Nick
One Man's Search For A Safe And Growing Income Stream - Part 5 [View article]
I noticed someone mentioned preferreds which can provide a potential fixed income stream. Be aware of what their call price and when the earliest call date is. Many of them will have indentures stating that they can be called early if "a Captial Treatment Event" occurs, usually a 90 day window. The Federal Reserve is phasing out Tier 1 treatment of bank trust preferreds which means many banks may be calling in their preferreds between now thru 2015 (and would be considered a capital treatment event).
About 40% of preferred securities pay QDI (qualified dividend income), and dividends will be taxed as ordinary income in 2013, unless new legislation in congress is passed.
I'm not a tax expert so make sure to speak with your tax-professional/ accountant regarding tax implications. For example - for MLPs there are sometimes potential advantages to having them in a non-qualified account but could be additional work having to ensure you have all the K-1s in time to file, etc.
good luck!
Juicy Yields On Goldman Preferred Issues [View article]
Preferred Stock Investing: The Income Alternative You Haven't Considered [View article]
Staying apolitical: About 40% of all preferreds are qualified dividend income (QDI) eligible. Begining 2013 - dividends are scheduled to be taxed as ordinary income which would be a top statutory rate of 39.6%, Dividends would also be subject to the 3.8% medicare surtax at high income levels, making top effective rate 42.4% (Congress would need to pass legislation to prevent these tax increases).
When Can You Retire On Dividends? [View article]
Even though TSP doesn't match the contribution there was the ability to dramatically reduce expenses and put the majority of my salary towards retirement. Being on deployment for 6+ months at a time gave opportunties to spend very little per month (no need for cell phone, and if you don't have a car - no expenses there, food is paid for, life insurance is minimal via SGLI, clothing is taken care of, kept busy working 16+ hour/day, etc.).
you can't save what you spend..