Beating the Street With Shareholder Yield

This week’s AAII Weekly Digest highlights these “must-read” AAII articles: Beating the Street With Shareholder Yield Companies with meaningful dividend yields and growing dividends often represent undervalued investment opportunities, with the added bonus that the dividend yield often serves as some protection against price declines. Companies can also repurchase outstanding shares. When a company reduces…

 

Options: The Concept of Equivalent Strategies

Naked put selling is equivalent to covered call writing in terms of where and how profits and losses are incurred. But it can be advantageous in terms of cost savings and potential reward. Talk to an investor who is involved in a covered call writing program about his doing some naked put selling instead and…

 

The Covered Call: An Income-Generating Options Strategy

The covered call provides extra income to a buy-and-hold strategy. In exchange for this income, there is a risk of lost opportunity. If the stock’s price rises well above the fixed strike price of the call, you have your 100 shares of stock called away below current market value. For some investors, this is an…

 

Weekly Survey: Retail Investors Respond to Rising Market Volatility

After experiencing some all-time-low volatility, it appears the U.S. stock market is seeing an uptick in volatility. On July 26, the CBOE Volatility Index, or VIX, widely considered to be Wall Street’s “fear gauge,” fell to its lowest level on record. Leading up to that, the VIX had steadily fallen to lows not seen in more…

 

Dividends Are Still Valuable

This week’s AAII Weekly Digest highlights these “must-read” AAII articles:   Cash Dividend Types, Dates and Taxes Though most investors know that a cash dividend is the distribution of money to shareholders, dividend terminology is not as well-understood. Terminology such as ordinary dividend, special dividend, ex-dividend and record date has unique and important meanings investors…

 

Taking on Risk and Hoping the Strategy Doesn’t Backfire

Oh boy. There’s something new to be filed under the category of, “Well, it seemed like a good idea at the time.” It is cash secured puts on the S&P 500. According to The Wall Street Journal, pension funds in Hawaii and South Carolina are using the strategy to generate income. It is a strategy…

 

What to Do If You Win the Lottery

Winning the lottery or otherwise suddenly coming into a large sum of money creates a set of challenges from a financial and estate planning standpoint. While it’s a problem many of us would like to have, it is a challenge nonetheless. Just one or two improper decisions at the outset can have unwanted ramifications in…

 

The Changes to Social Security Claiming Strategies

This week’s AAII Weekly Features highlight these valuable AAII articles: A Satirical Take on Financial Terminology: Financial terms often mean the opposite of what they appear to signify. Poking fun can unveil weaknesses and risks not so apparent on first glance. The Changes to Social Security Claiming Strategies: Couples will no longer be able to…

 

A Comprehensive Approach to Covered Call Writing

Setting up a covered call portfolio using securities that generated significant dividend distributions was covered by Ben Branch, professor of finance at the University of Massachusetts, Amherst, in two wonderful articles published in the AAII Journal last year. The articles ran under the titles “Assembling a Covered Call Portfolio on Dividend-Paying Stocks” (June 2014), and…