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19May/130

Aristocrats Update: Altria (MO) dropped from portfolio

Screen Shot 2013-05-18 at 22.17.35This Friday was options expiration, and I'm a bit sorry to say that I let my shares go. I had $34 calls that I wrote over a month ago, around the onset of the rally. I thought the price was going to pull back, giving me an opportunity to close the position for a small profit, but then it just continued to run. It got so deep into the money it didn't make much sense to roll it. 

The problem with rolling a call that's deep in the money is that you'll need to push the expiration much further away to pocket some more cash in the process, and you often won't be able to roll up to a higher strike unless you max out the time horizon.

Anyways, faced with the choice of pocketing an extra $20 or $30 in premium and pushing my expiration out to January 2014 or letting the stock go, I decided to let it go. I have Altria shares in two other accounts: my Roth and my Sharebuilder; so in some respects I'm probably a bit overweight on it. I got a few dividend payments out of it, and I was able to write a few calls from time to time. All in all, I made good money on it while I had it, it's time to employ the money elsewhere.

What to do next

Well, I'll have $3400 on Monday to plow into some other positions. I can either carry on buying small blocks of aristocrats, or write some puts on something to push the cash out. I did consider writing some Altria puts on Friday right before expiration, but decided not to. See usually when my shares get exercised I'll take the cash and write a secured put on the same security, with the hopes of either getting back in to write more calls.

Here's what's on my radar this week for dividend Aristocrats:3M (MMM) ex-date is Wednesday 22 May
Johnson & Johnson (JNJ) ex-date is Thursday 23 May
McGraw-Hill Financial (MHFI) ex-date is Friday 24 May

Also on my radar is Ford Motor Co (F), breaking $15 this week is a huge signal, with some saying it's a psychological level and the next stop being $20. Thinking of writing some puts against my $3400 and buying a small block of MHFI with what's left. We'll see how it plays out.

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