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5/29/24

Our followers know we keep score of our performance by income.  Limiting ourselves to Dividend Champions (DC) and Tech DC Wannabes (firms that will certainly be DCs given enough time), our income constantly increases. That doesn’t mean we don’t pay attention to markets and values. When we are flush with cash, market ups and downs don’t bother us very much. In fact, market volatility is our friend. We Sell the Dips; that’s out of the money (OM) puts. That way we earn additional fees and may buy our DCs at “wholesale” prices. With the DOW down over 200 yesterday. we normally would have sold OM puts on our targets. But, as we discussed recently, we now have limited cash, expect substantial market risk during the balance of the year, and want to avoid going out on high cost margin beyond a minimal amount.

 

Yesterday, our one outstanding put contract on WST striking 6.21.24 at $330 went in the money.  It closed at $327.47. We like WST. We have owned it for a long time and have done pretty well.  The dividend is low at .24%, but that increased by about 7.2%/year for the last decade. Not great and not bad. We could buy to cancel the put with a loss of about $676. We have enough cash to buy the stock at $33,000 if we had to.  But we’ll watch it for a couple of days together with our other outstanding options to see whether we would rather use our cash to buy the stock or use less cash to cancel the option. Look on the bright side. We sold a WST put on a day when it was down over 2%.  The put we sold had a strike price 15% lower than that dipped price. So, if we were to buy WST at the $330 price it’s substantially below where it was the day we sold the contract.  Not such a bad “problem” to have!

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