top of page
  • Writer's picturethemoneyloaf

Early assignment in O

Updated: Jun 8

Way back in September 2023, I got assigned 100 shares of O (Realty Income) at $57.50 per share (which I covered in this post).

It's been 7 months since then and I wanted to give an update on where the trade has gone and what the plan is for the trade.

First, let's talk about pure stock price. I got assigned at $57.50 per share and O is currently trading at $55.01 per share (I'm going to count it at $55 for easy calculation), that's a $2.50 loss per share, or $250 for the 100 shares.

How does this options thing make sense again?

Well that's only part of the story.


Prior to getting assigned I collected $115 in premium from selling cash-secured puts, and since getting assigned I've sold 4 covered calls for $183. Added together, that's $298 in realized options premium.

On top of that, O has been paying a dividend of about $0.25 per share monthly, and I have received 7 of those dividend payouts adding up to $205.20. To keep calculations simple, I will assume these dividends weren't reinvested (although they were).

This brings my effective cost basis to ($5,750 - $298 - $205.20) / 100 = $52.47.

So now we're looking at a $2.53 profit per share, or $253 for the overall position.

That's a swing of $500. Purely generated by options and dividends.

If I wasn't trading this position as part of my portfolio, I could just sell off the stock at market price and call it a day.

But of course my goal is to use options to get out of it - I'm still selling the covered call at $57.50 and collecting monthly dividends while waiting.

By the way these 100 shares are just for this public portfolio. I have another 300 shares in my personal portfolio that I intend to hold on to for a long time. I'm still selling options against them to continually lower my cost basis and eventually own them for free.

This is where I think your why of getting into options trading is important. If you're looking at it as a way to generate some insane ROI, it's probably not going to work out very well.

If you look at it as a way to generate cashflow before, during and after you buy stocks and using that cashflow to buy stock at a discount which you can then hold for years, then you're more likely to be successful.

That's certainly how I look at it.

As always, this trade was assigned in my public portfolio, which means subscribers to my private community get almost real-time updates about how I'm managing the trade.

If that's something you're interested in, the link to find out more is just below.



 

Closing words

It's been a quiet start to May so far, almost too quiet.

As a result I've been sitting on the sidelines a little bit and managing my existing positions and waiting for the next opportunity to surface.


 

This article is for educational purposes only. This is my own portfolio which is being managed according to my goals and risk tolerance. Your situation is likely different and you should do your own due diligence before investing in stocks or options.

bottom of page