NRZ is looking impressive with a 12% dividend:
NRZ has good options out to 2020 so that makes them more attractive and we can pick them up for the LTP as:
- Buy 1,000 shares at $16.61 ($16,610)
- Sell 10 2020 $15 calls for $1.95 ($1,950)
- Sell 10 2020 $15 puts for $2.10 ($2,100)
That's net $12,560 ($12.56/share) and we collect $2,000/yr in dividends so 16% on just the dividends plus another $2,390 if called away at $15 for a total profit of $6,390 (51%) on our $12,560 investment in two years but, hopefully, we'll be able to keep it for many more.
In other REITs we love:
CIM is $16.92 but selling Sept $16 puts is only 0.80 and Sept $17 calls are 0.60 so, despite the fact that I love them - they simply aren't paying enough.
NLY is $10.21 and this one we can play as it's too cheap. For the LTP and the OOP:
- Buy 1,000 shares NLY at $10.21 ($10,210)
- Sell 10 2020 $10 puts for $1.80 ($1,800)
That's net $8,410 and we're not selling calls because they are too cheap and I hope they go lower so we can buy more! Dividend is $1.20 ($1,200)/yr so nice 14.2% while we wait to lower our basis even further.
ARR is another one I like, especially on Sept 19th and they are right at $22.50 and the October contracts are out and have $22.50 strikes so we may as well pull the trigger on these too for the LTP:
- Buy 1,000 ARR at $22.50 ($22,500)
- Sell 10 Oct $22.50 calls for $1 ($1,000)
- Sell 10 Oct $22.50 puts for $2 ($2,000)
That's net $19,500 ($19.50) and they pay $2.28 (11.7%) but it's only 240 days vs 694 so 2 more sales at $3,000 drops us to $13,500 and drives the dividend to 17% - so it's the best of the bunch other than we have to make our sales in 3 rounds and I do prefer the better protection of collecting more up front.
