The Investment Road to Freedom

May 6th, 2013 at 7:11 pm

MSFT – Sale and Option Transaction

I first started my position in Microsoft (MSFT) back in July 2012 when I purchased 22 shares at $29.50 each. I figured they were the perfect company to have in my portfolio and over the last few months I have been looking to add 78 more shares so I could do Covered Calls to add to the dividend income. Well I was looking for that perfect moment to buy the 78 shares but I just could not find it. So I did the following instead

  • On May 3rd I sold my 22 shares for $33.34 each. This resulted in a 10.1% profit in 217 days.
  • I then sold a cash secured put for JUN2013 with a strike price of $32. After commissions I received $40.01 for a 1.24% return on my capital invested. If I am assigned 100 shares at $32 come expiration my cost basis will be $30.94. At that point I will do Covered Calls with the goal of never losing my shares.

Now if my put expires and I am not assigned the shares then I will continue to do put’s until I am.

My total income from investing in Microsoft since July 2012 is as follows:

  • Dividends = $14.52
  • Put Options = $40.01
  • Capital Gains = $66.56

 

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2
  • JC @ Passive-Income-Pursuit
    9:49 am on May 8th, 2013 1

    I have a similar plan in place with CSCO. I’ve already sold a put option and once assigned will plan on selling covered calls. I still want to own some of the company so I might purchase some shares or continue selling puts until assigned. Looks like a great profit for you there. The market appreciation this year has made it very difficult to make too many purchases. I went ahead and picked up some MSFT yesterday but will be looking to average down the cost basis around the $31ish price point.

  • investmentroadtofreedom.com
    4:51 pm on May 8th, 2013 2

    Hi JC! It’s been a difficult year so far trying to find the right time to buy. Selling the puts is a good way to get in to the stock at a discount. Hope all is well!