Earlier this week I sold two cash secured puts for L Brands Inc. This morning I decided to buy 100 shares and sell a covered call. Retailer stocks have been hit hard this year, especially so the past 30 days. Amazon is kicking everyone’s butts. L Brands is suffering too. The company stock is hovering just above its 52-week low at $45.30. This is $2.26 above the 52-week low and $34.37 below its 52-week high.
The puts I sold were at strike prices of $35 and $40. I don’t think the stock will fall to these levels and I’d like to own shares. Because of this I bought the 100 shares today at $45.30 and a $1 transaction fee. Total purchase price was $4,531. This new stock will increase my annual dividends by $240. This will take me above my 2017 goal of $7,500 in annual dividends. L Brands usually pays an annual special dividend either in Q1 or Q4. The company hasn’t paid this dividend yet this year. I’m hopeful that a special dividend is paid in Q4. This will just be more whipped cream on top of my dividend sundae.
The chart below shows these special dividends. from 2010 to 2016 L Brands has paid this dividend every year with exception to 2012. 
L Brands special dividend amounts over these years has been the following:
L Brands Covered Call
I bought the 100 shares and immediately sold a covered call. There’s decent premiums on both sides of the options market for this stock, which is why I decided to buy shares and sell this covered call. The details of my covered call are as follows:
Combining my premiums from the two puts I sold earlier in the week, I’ve made $387.70 in premiums. If I let these expire, my per share cost basis of L Brands stock is $41.43. I’ve updated my options tracker to account for this last covered call. I now have 15 open contracts, representing potential revenue of $4,437.
Leave A Comment