My 10 Year Anniversary of Holding $BNS October 20, 2008

Over the months of 2018 BNS has been getting rocked and hit prices not seen since December 2016. Today I picked up 25 more shares of Bank of Nova Scotia at $70.05. When updating my spreadsheet I noticed October 23 was my 10th year anniversary of holding BNS.

Originally, I purchased 50 shares of BNS on October 9, 2008 at $42.00 and sold October 17, 2008 at $46.01. Then October 23, 2008 re-purchased at $40.50. A month later, averaged down with 45 shares on November 20, 2008 at $38.80.

The TSX on October 23, 2008 was at 9,331.40 fluctuating from there until November 20 when the TSX tumbled to 7,724.80. I looked it up and https://www.thestar.com/business/2008/11/20/tsx_falls_over_750_points.html there was a 765.80 point drop on that day. Today, TSX is at 14,924.08.

My 2008 dividend was an annual $1.92 with a Yield to Cost of 4.823%. Whereas the 2018 dividend has increased 70.83% to $3.28 and through Averaging Up my Yield to Cost of 5.147%. Otherwise, if held at the original price the Yield to Cost would have been 8.24%.

At the height of my holdings February 26, 2016 I had accumulated a total of 1,000 shares, but eventually reduced my position for the purchase of my dwelling (and with that the cessation of my 50K Report.). My current holding has been reduced to 425 shares.


I wish I could remember what I was thinking back in 2008, especially since this holding would have represented a significant amount of my money. Evidently, I held and turned on the DRIP with the next purchase of 1 share on May 4, 2009 at an even lower at $34.74. From there on subsequent purchases were at increasing prices.

This has been a core long term holding and will likely continue to be.

The 2K Club Is Now Open: $ENF Enbridge Income Fund Holdings Inc

Enbridge Income Fund Holdings Inc and Enbridge Inc released a $500,000,000 secondary share offering today at $33.15 a 3.5% discount to the previous day's trade of $34.51. At $33.15 ENF has a yield to cost of 6.193%. The offer closes April 18, 2017.

http://www.marketwired.com/press-release/enbridge-income-fund-holdings-inc-announces-05-billion-secondary-offering-common-shares-tsx-enf-2205637.htm

My portfolio already has a significant number of ENF shares 800 @ $30.3604 with a yield to cost of 6.7627%. The position provides a total yearly income of $1,642.56.

The price drop presented a compelling opportunity and led to a decision to overload my position though picking up 300 more shares at $33.29. Effectively, my share count is now 1,100 @ $31.1693 with a lower yield to cost of 6.5872%. However, the new position now provides a higher yearly income of $2,258.52.

Welcome to The 2K Club.

I will need to monitor as this add-on as it is completely funded with debt at 3.45%. The dividend covers the interest payments nicely plus some of the principle. If the shares increase enough then it will be an opportunity to lighten up. Utilising investment debt is a add-on strategy to my original dividend portfolio goal. My portfolio will forego Dividend Reinvestment and replace it with earlier and larger share purchases with the cash flow paying off the debts.

We're nearing the end of March and I will start working on my 50K Report for Q1 FY2017. Since Q4 FY2016 there have been interesting developments bringing me ever-so-slightly closer to the 50K goal.

The 50K Report - 2016 Ends. (Q4 FY2016)

Q4 FY2016 (October, November, and December)
Next update: End of Q1FY2017 (January, February, and March)

Investment Goals:

1. Continue adding to higher quality large cap equities.
2. Continue slimming down number of holdings within portfolio.
3. Continue seeking opportunities to broaden portfolio by sector.
4. Focus on stocks that have a DRIP plan.
5. Continue concentrating existing holdings to achieve $1,000 dividend mark (1K Club)
6. $50,000 passive income target. (eg. $1,000,000 at 5% will yield $50,000 per year.)

Developments:

- Calculation of Total Book Value Required: $50,000 / % yield = Book Value (eg. 4.31% = $1,160,092.81)

- Current Target Book Value @ 4.6878%: $1,083,805.9564

- Further stratification of income Goal Posts.

- Ontario Minimum Wage Increase reflected: $11.40.
- Achieved new updated Minimum Wage Goal Post: $17,748

- Record Distribution income $18,891.95

- Reorganised data to breakdown by account type: Non-Registered, RRSP, TFSA, and DPSP (Employer).

- Included Margin Debt. Margin debt was used sporadically over the course of the year to practice for use as a potential long term tool. The intention is to use this in lieu of DRIP; to take advantage of Tax Deduction; and leverage my growing portfolio with manageable debt.

- Goal to become more fluid and not be too attached to my current yield to cost.

- Markets have risen significantly post-November US Election and the US Fed raising their interest rates.

- Got this report out on time.

Distribution Changes:

- Distribution income increased from Q3FY2016's $15,334.55 to $18,891.95. (+$3,557.40 or +23.1985%)
- Doubled BCE Inc adding it to the 1K Club; added more BCE Inc Preferred Shares Series H; added 96 more shares of Scotia Bank to round out position; added more Enbridge Preferred Share Series R, Inter Pipeline Ltd, Telus Corp, Diversified Royalty Corp, iShares TSX Preferred Shares ETF, and TransCanada Corp.

- Distribution increase for Inter Pipeline Ltd, Telus Corp, Allied Properties REIT, and Interrent REIT

- Added CI Financial Corp, Bank of Montreal, Toronto Dominion Bank, and Bristol Myers Squibb Co (BMY).

- BMY was a Put Assignment.

- Included an existing position, StorageVault Canada Inc, but it has an insignificant yield of 1.0862%

- Reduced Manulife Financial.

- Removed Bank of America and Imvescor Restaurant Group Inc.
- Stratification of Goal Posts to emulate increased hours of work.

Progress for Q4 FY2016. (Values represent potential full year cash flow):

Book Value	$409,504.09
Yearly Distribution	$18,891.95
Yield Total	4.61%
Margin Debt	-$38,571.58
Margin Interest	3.45%

Goal Posts:

- Increased stratification to 6 Goal Posts.

- First 3 Goals are related to:

• Minimum Wage of $11.40
• Hours of work per week: 30, 37.5, and 40.
• 37.5 hours reflects my current weekly work hours.

- Final 3 Goals are check points for achieving the mid-30 and 40 thousand dollar range.

Dividend Goal	% Completion	Remaining
$50,000	37.89%	$31,108.05
$45,000	41.98%	$26,108.05
$35,000	53.98%	$16,108.05
$23,712	79.67%	$4,820.05
$22,230	84.98%	$3,338.05
$17,784	106.23%	-$1,107.95

Holdings (Monthly Change):

October

Book Value: $318,837.7550

Yearly Dividend: $15,110.4405

Yield Total: 4.7392%

November

Book Value: $349,770.4735

Yearly Dividend: $16,655.5133

Yield Total: 4.7618%

December

Book Value: $409,504.0898

Yearly Dividend: $18,891.9468

Yield Total: 4.6133%

Upcoming:

• Adding new metrics:
  • I've added to my individual stock investment spreadsheets the total distributions gained over time.
  • Whilst writing up this 50K report thought of how and which metrics would be relevant to provide a snapshot of distribution returns in comparison to the investment.
  • Working on little kinks in the presentation of information:
    • If I sold a portion at a loss the % return from distributions will become larger starting at that period.
    • How to make the spreadsheet more simple to avoid manual manipulation of invidual cells.
• Three metrics for % Returns:
  • % Returned (Overall):
    • Formula: Total Dividends divided by Currently Book Value.
    • Purpose: Takes absolute returns of both historical and latest Book Value. This shows how much the distributions cover existing Book Value.
    • Example (BCE): 17.6291%
  • % Returned (Average Yearly Book Value):
    • Formula: Total Dividends divided by Yearly Average Book Value.
    • Purpose: Smooths out the Overall distribution return by looking at the Average Book Value per Year. This shows how much the distributions cover the Book Value for the entire year.
    • Example (BCE): 32.3046%
  • % Returned (Yearly):
    • Formula: Yearly Dividends divided by Yearly Average Book Value.
    • Purpose: Purely looks at the year's returns. This is a reflection of the stock's average annual yield.
    • Example (BCE): 7.0183%

The 50K Report - Quick Update: Achieved Dividend Goal #1 ($17,784)

Dividend Goal #1 is derived by the Ontario Minimum Wage ($11.40/hr) x Minimum Full Time Hours (30) x 52 Weeks = $17,784.

An exciting milestone has been reached as my Bristol Meyers Squibb BMY Puts were assigned on Friday, December 16 and today I purchased some Toronto Dominion Bank (TD). Together these two stocks helped me achieve a yearly dividend (currency considered at par value) of $18,039.86794. This has broken through Dividend Goal #1 of receiving $17,784 by $255.86794.

Goal #2 is an increase of working hours to 37.5 taking the target to $22,230. Another $4,446-$255.8679= $4,190.13 to go.

However, this may be a temporary situation as retention of these two positions will be fluid. BMY was assigned last Friday and is currently underwater. I will hold on until profitability has been achieved and will hold until another opportunity is presented for a US stock. Though BMY seems to be a good hold as it helps round out my portfolio on the bio/pharma side and a slight +2.6315% +$0.01 dividend increase is coming up.

TD is an effort to utilize Covered Call writing. However, I am buying now close to the 52 week high, which was reached on today's intraday price $67.21. I sold it back in 2014 at $51.80. Totally should have held on and the dividend has increased since then.

US markets are blowing through all time highs and reaching DOW 20K... Nervous. TSX has been doing quite well.

The 50K Report - Market Continues Upward Trend Q3FY2016

The 50K Report – Market Continues Upward Trend (Q3 FY2016)

Q3 FY2016 (July, August, and September)

- $50,000 passive income target. (eg. $1,000,000 at 5% will yield $50,000 per year.)
- Calculation of Total Book Value Required: $50,000 / % yield = Book Value (eg. 4.31% = $1,160,092.81)
- Current Target Book Value @ 4.6878%: $1,066,598.40
- Next major update: End of Q4FY2016 (October, November, and December).

Investment Goals:

1. Continue adding to higher quality large cap equities.
2. Continue slimming down number of holdings within portfolio.
3. Continue seeking opportunities to broaden portfolio by sector.
4. Focus on stocks that have a DRIP plan.
5. Continue concentrating existing holdings to achieve $1,000 dividend mark (1K Club)

Distribution Changes:

- Distribution income decreased from Q2FY2016's $16,792.77 to $15,334.55. (-$1,458.22 or -8.6836%)
- Decrease mainly due removing Canadian Western Bank (CWB); doubled Canadian Apartment REIT adding it to 1K Club; added 100 more shares of Enbridge Income Fund to bring it into the 1K Club; Enbridge Preferred Share Series R added 15 shares via DRIP bringing it into the 1K Club; reduced Sunlife Financial SLF by 100 shares; and removed Wells Fargo WFC.
- Achievement of reaching the Minimum Wage Goal of $17,550 is now at 87.37% with $2,215.45 outstanding.

Progress for Q3 FY2016. (Values represent potential full year cash flow.):

Book Value	$327,113.90
Yearly Distribution	$15,334.55
Yield Total	4.68%

- 3 goal posts: $17,550 (Approximate Minimum Wage), $25,000 (Half-way), and $50,000.

Dividend Goal	% Completion	Remaining
$50,000	30.69%	$34,665.45
$25,000	61.33%	$9,665.45
$17,550	87.37%	$2,215.45

Holdings:

- Monthly Change:

July

Book Value: $314,151.397115

Yearly Dividend: $14,801.76496

Yield Total: 4.711666%

August

Book Value: $320,146.073931

Yearly Dividend: $15,013.72552

Yield Total: 4.689648%

September

Book Value: $327,113.900313

Yearly Dividend: $15,345.3688

Yield Total: 4.691139%

Updates:

- Added: Small position in Imvescor Restaurant Group (IRG)
- Increased: CAR.UN and ENF

- Decreased: SLF

- Removed: CWB

Upcoming:

- Updating the goalposts and adjustments on Minimum Wage and hours worked.

The 50K Report - Q2FY2016

Q2 FY2016 (April, May, and June)

- $50,000 passive income target. (eg. $1,000,000 at 5% will yield $50,000 per year.)
- Calculation of Total Book Value Required: $50,000 / % yield = Book Value (eg. 4.31% = $1,160,092.81)
- Current Target Book Value @ 4.557%: $1,097,120.388
- Next major update: End of Q3FY2016 (July, August, and September).

Investment Goals:

1. Continue adding to higher quality large cap equities.
2. Continue slimming down number of holdings within portfolio.
3. Continue seeking opportunities to broaden portfolio by sector.
4. Focus on stocks that have a DRIP plan.
5. Continue concentrating existing holdings to achieve $1,000 dividend mark (1K Club)

Distribution Changes:

- Achieved highest distribution amount of portfolio.
- Distribution income increased from Q2FY2016's $14,221.3584 to Q2FY2016's $16,792.77. (+$2571.4116 or +18.0813%)
- Yield remains roughly the same as Q2.
- Increase is mainly due to doubling holding of Canadian Western Bank (CWB) to average down in anticipation of temporarily higher oil prices; Averaging down Manulife; adding more IPL to join 1K Club; and addition of Enbridge Income Fund (ENF).
- Removed FairFax Financial Preferred Shares Series I (FFH.PR.I), InnVest REIT (INN.UN), and TMX Group (X).
- INN.UN buyout was announced in May. Missed buyout opportunity.
- Dividend Cut and frequency change from Monthly to Quarterly payout for GoldCorp (G).
- Achievement of reaching the Minimum Wage Goal is now at 95.69% with $757.23 outstanding.

Progress for Q2 FY2016. (Values represent potential full year cash flow.):

Book Value	$368,473.76
Yearly Distribution	$16,792.77
Yield Total	4.56%

- 3 goal posts: $17,550 (Approximate Minimum Wage), $25,000 (Half-way), and $50,000.

Dividend Goal	% Completion	Remaining
$50,000	33.59%	$33,207.23
$25,000	67.17%	$8,207.23
$17,550	95.69%	$757.23

Holdings:

- Monthly Change:

April

Book Value: $336,133.296205

Yearly Dividend: $14,782.138120

Yield Total: 4.397701%

May

Book Value: $321,571.687479

Yearly Dividend: $14,780.570160

Yield Total: 4.596353%

June

Book Value: $368,473.758979

Yearly Dividend: $16,792.7694

Yield Total: 4.557385%

Updates:

- Added: ENF
- Increased: CWB, MFC, IPL

- Dividend Increased: T, WFC
- Removed: FFH.PR.I, INN.UN, X

Upcoming:

- Still working on getting this 50K report in a more timely manner.

- Continue working on new report called the 1K Club to show holdings that have crossed over the $1,000 dividend mark.

Choppy accumulation of Manulife $MFC

In terms of capital appreciation Manulife Financial has done poorly over the years, but it has been left as an integral part of my 50K Dividend goal.

A small 10 share position at $23.69 was initiated September 23, 2009. However, MFC slid further and 100 more shares were added at $18.84 on December 15, 2009. Taking the year's average price to $19.4618.

Over the years more shares were added at varying prices via direct share purchases and Dividend Reinvestment.

Average Price at Year-End:

2009: $19.4618

2010: $17.0131

2011: $15.9463

2012: $15.9209

2013: $15.9337

2014: $17.9087

2015: $19.9372

2016 (as of October): $19.2009

2015 signalled the high point of my MFC position when the June 26, 2015 DRIP acquired 3 shares @ $23.68. It took under five and a half years for MFC to round trip back to what I paid in the 2009. 

After that peak MFC retreated significantly. It slid back as the oil oversupply crisis was starting to intensify and talk of MFC's oil related portfolio caused great uncertainty in the stock. This prompted me to acquire more shares @ $20.50 in September and then again @ $21.80 in November.

The oil crisis deepened in the start of 2016 and MFC slid alongside. This was my chance to add MFC to my 1K Club and take the risk of averaging down then wait for a recovery of the share price and reduce my exposure. The risk of course being that MFC continues lower and my position could grow to large in relation to my other holdings.

Buy	2016-03-29	10	18.86
Buy	2016-05-10	280	18.56
Buy	2016-05-13	290	18.04
Sell	2016-05-27	250	19.48
Buy	2016-06-03	200	19.04
Buy	2016-06-10	200	18.04
Sell	2016-10-11	300	19.37

The markets got a little iffy on May 10, but the price was good to load up my position to 1360 shares bringing MFC to the 1K club with a $1,006.40 yearly dividend.

The stock declined further prompting me to add even more shares on May 13. Fortunately, by end of month the price rebounded giving an opportunity to reduce my position at a small profit. Average price: $19.3756.

Markets remained choppy and again within a short period of time I overloaded my position by adding shares twice at lower prices. A few uncomfortable months later on October 11 with interest rate hike speculation increasing MFC rose again allowing me to pare back. Average price: $19.2009. Yield: 3.8539%.

The year isn't over yet and there will likely be more opportunities to average down my long position.

DRIP Report (On Hold)

Since approximately April/May 2016 the majority of DRIPs in my primary portfolio were ceased. I was starting to get close to buy a property and needed the cashflow. While the property deal did not go through it has been uncertain whether another opportunity would open up. As such DRIP Report is on hold.

Certain DRIPs will remain such as those in my secondary portfolio and the Registered accounts TFSA/RRSP.

Currently:

CAR.UN 2% DRIP discount makes this worthwhile. Although rate hike fears and Canadian mortgage changes adds some uncertainty to it and similar REITs.

GWO letting it ride. Eventually, I add it to the 1K club via Secured Put or straight equity buy.

ENB.PR.T deep underwater on this one. I'll keep adding it to average down, income, and eventually in the unknown future it may be redeemed by Enbridge.

BCE.PR.H deep underwater on this one. Same reasons as above, but a rate increase could benefit the Prime Rate.

YRI on DRIP, but barely makes enough to purchase a share.

G on DRIP, but doesn't make enough to purchase a share.

AP.UN on DRIP, but does not make enough to purchase a share.

IIP.UN 4% DRIP discount makes this worthwhile. Same issue with rate hike fears and Canadian mortgage changes.

BBD.PR.B deep underwater. Same reasons as BCE.PR.H.

FIE letting it ride.

DIV 3% DRIP discount, but my secondary portfolio is within a brokerage that does not provide the discount. Deep underwater.

GRC a write off at this point. Continuing the DRIP to average down.

AXY new addition.

TWM new addition.

MTL new addition. doesn't make enough to purchase a share.

HSE Dividend continues to be suspended.

Club 1,000 - Concentrating Positions For More Dividends

Originally written: May 11, 2016.
Posting as is: October 9, 2016

Diversification is great to a certain extent. For a regular investor like myself holding maybe 20 or so stocks is more than enough to keep track. Over time adding little positions here and there makes the 20 grow into ever more positions and this becomes harder to track and manage. As well, commissions start to not make sense as they accumulate on almost inconsequential additions.

I decided to work on concentrating my portfolio through reducing the number positions. One of the reasons why I temporarily dropped INN.UN a few weeks ago and regretted it when a takeover was announced. Regardless, another other way to prevent further widening of the portfolio is to divert resources concentrate existing positions and gain greater dividends from them.

With this in mind I looked at my current non-registered account positions and noticed a few holdings that give me less than $100 per year. The bulk of holdings range between $200 and $700, which are along their way to becoming larger holdings. Then I've got my handful of $900 to +$1,000's, with the $900's within 30-50 shares away from tipping into the $1,000 mark.

Effectively, I now have four stocks in Club 1,000. Until May 10th, I only had 2 full unencumbered holding within Club 1,000: Bank of Nova Scotia and Bank of Montreal. Manulife Financial has been underwater for some time so I took the opportunity to increase my holdings and bump up the dividend returns. I also have Covered Call options on Sunlife Financial expiring in July, which at current price would have dropped my dividends below the $1,000 threshold. Today May 11th, I decided to purchase more shares of Sunlife Financial to firmly place this holding's dividends above $1,000.

The next largest dividend payer is Enbridge Preferred Shares Series R, giving me $978.00, but the dividend and share price upside potential are both currently limited. Within 2 years the preferred share's rate will reset based on the Government of Canada (GoC) 5 year rate +2.50%. If the yield of the GoC remains low then the existing payout may change and drop the holding outside of Club 1,000. Ex-dividend is May 15 (yippie!) with payment on June 1st. At current price of $15.61 and total quarterly pay out of $244.50; the Questrade Dividend Reinvestment could comfortably add another 15 shares. Calculating further, with the current $0.25/quarter dividend then I gain another $3.75 of income totalling $981.75. An incremental gain of 0.0383% or 1.533% annualized.

Further down the list of existing holdings that I wish to increase for greater sector diversification in Club 1,000 are my Telecom/Media stocks BCE and Telus. They are still far off from the $1,000 mark, paying $487.52 and $600.60 respectively. They have been raising their dividends yearly and consistently, which has helped boost their contribution to the goal. However, for significant increases in the dividend returned, I am waiting for the opportunity of a decline in the share prices to purchase more.

The goal is to continue increasing the Club 1,000's dividends; diversify the Club's sector holdings; maintain a higher average yield for the overall portfolio; and increase the dividends from up and coming stocks. The preference is to raise up investments with higher quality and upside potential and this means increasing holdings of those more likely to raise their dividends and continuing to use Dividend Reinvestment Plans to automatically accrue more shares.

It will take a lot of time and potential setbacks, but this is all to push towards the $50,000 distribution goal. Which reminds me; I haven't put together the 50K Report for some time...

The 50K Report – Market Volatility (Q1FY2016)

Q1 FY2016 (January, February, and March)

- $50,000 passive income target. (eg. $1,000,000 at 5% will yield $50,000 per year.)
- Calculation of Total Book Value Required: $50,000 / % yield = Book Value (eg. 4.31% = $1,160,092.81)
- Current Target Book Value @ 4.5572%: $1,097,164.925
- Next major update: End of Q2FY2016 (April, May, and June).

Investment Goals:

1. Add to higher quality large cap equities.
2. Looking for opportunities to slim down number of holdings within portfolio.
3. Conversely, looking to broaden portfolio by sector.
4. Focus on stocks that can be DRIP'd.
5. Concentrate existing holdings to achieve $1,000 dividend mark (1K Club)

Distribution Changes:

- Distribution income declined from Q42015's $15,176.50 to Q12016's $14,221.3584.(-$955.1416 or -6.2935%)
- Decrease reflects movements made in reaction to market volatility and in particular crashing oil prices.
- Major reduction occurred March as two separate strikes of BNS Calls were exercised; reducing BNS holdings by 500 shares and $350.
- Achievement of reaching the Minimum Wage Goal is now at 86.47% with $2,373.49 outstanding.
- Noticed increasing TRP dividend was not recorded since Q4 2014.

Progress for Q1 FY2016. (Values represent potential full year cash flow.):

Book Value	$312,057.64
Yearly Div	$14,221.36
Yield Total	4.56%

- 3 goal posts: $17,550 (Approximate Minimum Wage), $25,000 (Half-way), and $50,000.

Dividend Goal	% Completion	Remaining
$50,000	28.44%	$35,778.64
$25,000	56.89%	$10,778.64
$17,550	81.03%	$3,328.64

Holdings:

- Monthly Change:

January

Book Value: $329,129.20

Yearly Dividend: $15,264.9934

Yield Total: 4.637994%

February

Book Value: $339,061.66

Yearly Dividend: $15,978.06372

Yield Total: 4.712436%

March

Book Value: $312,057.64

Yearly Dividend: $14,221.3584

Yield Total: 4.557286%

Updates:

- Reduced: BNS, IPL, T, INN.UN, CAR.UN

- Added: SLF, WFC, MCBC, X, TRP

- Dividend Increased: BCE, GWO, MFC, TRP
- Removed: NA, HSE
- HSE eliminated its dividend

- TRP dividend increased and noticed record was not updated since Q4 2014.

Upcoming:

- I'm working on getting this 50K report in a more timely manner.

- Adding a new report called the 1K Club to show holdings that have crossed over the $1,000 dividend mark.
- Markets have risen since Q1, we'll see how the portfolio has changed by the end of June.

Hedge-Lite: Writing Covered Calls

I'm remain net long as I seek to achieve my goal of $50,000 in yearly distributions. However, it really is painful to see the market value of my portfolio take a beating. Seriously painful. One strategy that works in a stable or declining market is writing Covered Calls to effectively create a small and limited hedge of my positions.

Writing a Covered Call means you are selling the right for another entity to Purchase shares that you own at a set Strike Price. This occurs if the share price is above the set Strike Price and works in a stable or declining market because the likelihood of expiry of the Call Option increases as share price decreases below the Strike Price (Out of the Money).

Expiry is the best outcome as it becomes free money in your pocket without further commissions. The Premium also generates a greater buffer for your shares, albeit it can be small one depending on the duration of the Call. The second best outcome would be buying back (Buy to Close) the Call options at a lower price. However, this makes more sense if you believe the market will rebound. The third best outcome might actually be the release of funds locked into the stock, which allows you to go and re-deploy the cash into another investment. An additional boost would be if any dividends are paid out during this time period until expiry of Buying to Close.

What are the hindrances to executing this strategy?

1. Belief that the market will rebound by the time of expiry
• Thinking the market will go back up after you write the Covered Call may cause you to think twice before writing the Covered Call.  This certainly could happen, but the vital piece of this strategy is that the Call is Covered by actual shares you own.
2. Commissions
• Depending on your brokerage the cost of buying/selling an Option is higher than buying actual shares. Also, you may need to consider the additional and much higher commission of Assignment, or when the stock is above the Call's Strike Price and hence must be sold.
3. Matching a good expiry date with a worthwhile Premium
• Does the Premium compensate you enough for the risk of having your shares sold and the time spent to wait for expiry?
• Does the Premium accommodate commission costs if you were to either Buy to Close or get Assigned?
4. Seller's Remorse
• You write a Covered Call then the share price goes up, which makes it more likely you'll be assigned and the actual price of the Call will go down.
5. Limited inventory of a stock
• A higher number of shares will allow you to extract more Premiums and to spread out the Commission costs, which increases the cash potential.

Example:

BNS

Current Price $52.92

Average Cost: $56.3952

Covered Call: BNS 2016APR15 56.00

Premium: $1.0278 (after commissions)

This means when April 25, 2016 rolls around and the share price does not reach $56.00 then I will pocket the $1.0278. In addition, there is a limited hedging aspect. I would consider the $1.0278 as a buffer for potential losses. In effect I am protected as if my shares' average cost is $56.3952-$1.0278=$55.3674.  When the Call options expire it will not impact the actual average cost; merely the cash that is now mine.

Looking at Buying to Close, the last indicated trade price was $0.87. This would mean $1.0278-$0.87=$0.1578. A much smaller buffer than if waiting for expiry.

As mentioned above, in this case there is a benefit with receiving an additional dividend before expiry date. BNS has an upcoming ex-dividend date of April 1; for an as of yet un-announced dividend of $0.70. This will provide an additional buffer the any downside of the share price.

The question is what if you own; in my case approximately 700 shares? Would I write a full 7 contracts or less? That is not as easily answered and depends on your needs. I wrote a post about Building Inventory For Covered Calls as a guide for myself of what portion of my share holdings I would be willing to part with via Covered Calls.