On April 6, 2020, I bought 120 shares of Energy Transfer LP (ET) paying $5.495 per share.
With its quarterly dividend payout of 0.3050 dollars per share, this latest buy has a dividend yield of 22.2% and will pay us $36.6 (before tax) every quarter. Awesome! As the tax for this stock is 37.5% we will get just $22.87. Still decent.
I initiated this sale just shortly 100 shares of ET were called away on April 3, 2020, at strike price 5. See Latest Stock Sale: 100 Shares of ET Called Away
Just shortly I bought this stock, I made more option trades on it:
- Sold 1 call ET 6 May 15'20 @ 0.54
- Bought 2 calls ET 8 May 15'20 @ 0.12
As you can see I'm selling a ratio call back spread here and made even a small premium of $22.80 (after commissions).
So what happens next? There are 3 possible scenarios
- ET is trading bellow strike price 6 on expiry day, in such case, my ratio call back streak expires worthless and I keep premium. That would be about a 4.1% gain in 39 days. Pretty nice.
- ET is trading in the range 6 and 8, in other circumstances, this would mean here is my max loss, but hey, I'm selling a covered call here, and remember I bought these shares at 5.495 apiece, so the worst that can happen my shares will get called away at strike price 6. But that will net me at least 50.5 cents per share + premium I collected from selling ratio call back spread. That's about 13.3% yield in 39 days.
- The best could happen ET is trading above strike price 8 - in such case, my two additionally bought calls will start to pump additional income and I will be able to sell this contract for a profit and keep my 100 shares. Nice.
As I'm in the aggressive stock recovery phase, I also sold ratio put back spreads on ET to collect more premium, ready to take 100 more shares at strike price 5 apiece
- Sold 1 put ET 5 May 15'20 @ 0.61
- Bought 2 puts ET 3 May 15'20 @ 0.12
From this put ratio back spread I was able to generate an additional premium of $29.80 (after commissions)
In total from my buy today I was able to generate instant $52.6 income.
As I'm suffering a lot lately in the stock market, my positions have been force liquidated, I just cannot afford to sit and wait before the market will bounce back (as many my shares have been sold to cover loses) I now own 120 shares of ET and my price per share now is $18.93.
To leave some space for recovery I should buy more ET stock at the current price level, unfortunately, don't have funds now + there are other stocks I should recover.
Stock Recovery table
I'm still short of 80 ET shares to be on the pre-crash level. If my put options will expire in the money I will take another 100 shares and that could dollar cost average my buy price to around $12.59. Now, this seems already quite optimistic.
I have some time to gather cash and I can use options income to get a little boost.