Triple Play Income Trade Alert: BX, VALE

Dear Triple Play Income Member,

We have ex-dividend opportunities in two of our natural resource positions that we should take action on today.

Rio Tinto Group (RIO): 80.18

Rio Tinto goes ex-dividend Thursday (3/10) with a dividend payout of $4.17 per share on 4/21 on a variable dividend rate (projected at 10.17% annually). We estimated the RIO ex-dividend date of 3/10 back in February but because RIO only has monthly options, we rolled out 18 Feb 72.50 put out to the 18 Mar 75 put with the knowledge that we may have to buy that put back. Today is the day.

The stock price is down over the last couple of days after a big run, so we can exit our current put position with a profit and buy the stock today at a better price than last week.

ACTION 1: Buy to close RIO 18 Mar 75 for around $2.12 or a 0.74 profit. 

ACTION 2: Buy RIO stock at market (around 80.18) ahead of the ex-dividend date on Thursday.

Vale S.A. (VALE): 20.62

Mining company Vale finally revealed their ex-dividend date last week as this Wednesday (3/9), paying a smaller dividend of 0.718 per share than first estimated but still a substantial annual dividend of at least 7.2%

We have been rolling our puts each week collecting 9.5% cash to date. Let’s buy back our 11 Mar 18 put for around 0.07 and buy the stock.

ACTION 1: Buy to close VALE 18 Mar 18 put for around 0.07.

ACTION 2: Buy VALE stock at market (around 20.62).

NOTE: Due to the volatility in both stocks, we will wait until the ex-dividend date to sell a covered call.

David Durham

Triple Play Income