Options and Dividends

Just wanted to share a couple of charts and tables.  The first is my dividends over the past several years by quarter.  One should keep in mind that these are multiplied by a factor, to keep actual figures confidential.

So you can see how I have transitioned since 2010 to a portfolio that creates more income. 2012 was a bit unusual in that there were some one time dividends, taking advantage of lower tax rates.  But I have probably slightly down-sized my dividend portfolio as I did re-start MFI in August of 2012 and part of those funds came from some sold dividend stocks.

The second table is interesting as well.  I was toying in January (the 17th) about whether one would do better buying in the money options on MFI stocks.  My thought was that MFI stocks are more volatile than ordinary stocks and that options (with their greater upside) might be a better investment.  So far, that thesis has been very correct.  Of course one point does not make a trend and we have been a market that has steadily gone up since January 17th, so the test is not unbiased at this time.

Since I started, my MFI Index is up 5.3% (not shabby).  The option index is up 24.5%!  Here are the positions:

 

Stock	Start Price	Strike	Expire Date	Start Option Price	Current Option Price	Change
JCOM	32.02	30.00	6/21/2013	3.00	9.20	206.7%
KLIC	12.45	12.00	6/21/2013	1.65	0.30	-81.8%
LPS	23.38	24.00	6/21/2013	2.10	2.50	19.0%
NSU	4.53	5.00	6/21/2013	0.35	0.05	-85.7%
VG	2.50	2.00	6/21/2013	0.65	1.05	61.5%
MANT	25.79	30.00	8/16/2013	0.75	0.20	-73.3%
PDLI	7.10	7.00	8/16/2013	0.50	0.75	50.0%
APOL	20.16	20.00	1/17/2014	3.70	1.82	-50.8%
GME	23.07	22.00	1/17/2014	3.20	12.40	287.5%
IDCC	44.63	43.50	1/17/2014	7.65	3.80	-50.3%
MSFT	27.04	27.00	1/17/2014	2.11	5.90	179.6%
QCOR	25.53	25.00	1/17/2014	5.60	7.50	33.9%
RTN	57.77	57.50	1/17/2014	3.80	3.25	-14.5%
STX	34.30	30.00	1/17/2014	7.00	8.40	20.0%
UIS	17.67	17.00	1/17/2014	3.20	2.35	-26.6%

Stock	Start Price	Strike	Expire Date	Start Option Price	Current Option Price	Change
AAPL	506.09	500.00	1/17/2014	64.00	11.00	-82.8%
CF	217.85	210.00	1/17/2014	30.03	10.00	-66.7%
CSCO	21.03	20.00	1/17/2014	2.50	1.86	-25.6%
DELL	12.61	10.00	1/17/2014	2.97	3.30	11.1%
HLF	45.06	45.00	1/17/2014	8.45	3.90	-53.8%
HFC	46.36	45.00	1/17/2014	6.62	10.40	57.1%
NUS	42.50	40.00	1/17/2014	7.50	12.80	70.7%
SAI	11.84	12.00	1/17/2014	1.07	2.95	175.7%
WCRX	13.50	11.00	1/17/2014	2.45	3.10	26.5%

Not surprisingly, the results are very volatile by stock.  You would not want to try this with a small basket.  Also, for many of these stocks, options seem pretty thinly traded.  So execution might be an issue.  To be clear, I am not using this approach and I currently do not intend to use it.  But I find it thought-provoking.