Monday, May 23, 2011

GE - New Position

A new CSP position was established today on General Electric (GE). All prices include IB commissions.

Dividend Champions StatusFallen Angel*
Previous Years of Consecutive Dividend Increases32**
Fair Value Estimate$25.00
Target Buy Price$20.00
Target Margin of Safety20.00%
Actual Buy Price$18.00
Actual Margin of Safety28.00%

*GE is what I classify as a Fallen Angel (i.e. former Dividend Champion). GE cut the dividend in 2009, but has since increased it in 2010 and 2011.
**Prior to cutting the dividend PFE had 32 years of consecutive dividend increases.

DateStockDescriptionTransactionStatusStock InvestmentIncome Generated
5/23/2011GECSP Margin UsedCSP 200 GE @ 18.00 ($3,600.00) 
5/23/2011GEInitial Put OptionSTO 2 Aug11 18.00 Put @ 0.50  $99.16

Position Summary

Cost Basis($3,600.00)
Income Generated$99.16
Percent Income Generated2.75%
Annualized Income Generated11.42%
Net Profit If Assigned$99.16
Percent Return If Assigned2.75%
Annualized Return If Assigned11.42%
Days Held to Expiration88 days