Thanks Sammy glad you liked it. Keep in mind that if you go over the $5k franking credit limit you lose all franking credits that you didn't hold for 45 days.
I am actually not going to trade this strategy anymore for this dividend season. With other franking credits I've got I am already half way there, and we are only 2 months into the financial year... I might put up some mock trades however.
I think the chart of HIL is not too bad. And 5% gross is pretty decent. I havent' traded HIL for a while but I used to pair it up with other companies related to the buildings industry: BLD, CSR, HST, GWA, ALS, FBU etc...
It is a good strategy at times like these when it is best for me to stay clear of the markets with my other strategies i.e swing trading.
Typically I'll try and find someone else's name to trade under for the March period. Agreed though must be careful not to get too close to $5k.
Thanks for suggesting hedges.
I am surprised it took you that long to come up with this issue!.
Low risk, time frame within their attention span and hands on all seemed rather compelling to me.There are plenty of easier ways to educate your kids about shares / trading.
The strategy is not about tax minimisation. It's about profiting. And the profit consist of dividends and franking credits offset against capital gains/losses. The 45-day rule and $5k threshold puts a limit on this strategy, because franking credit is a large part of the edge... but tax minimisation isn't the goal, nor is it achieved (I am paying more tax as a result of the profits!).
I am sure you understand they were only suggestions for you to look at, not suggestions for you to use.
Can’t help it – I’m just slow.
Low risk, time frame within their attention span and hands on all seemed rather compelling to me.
Utilising the 45 day exemption, tax free threshold and avoiding the penalty tax is a lot of edge – referring to it as tax minimisation though wasn’t probably the best choice of words. If a business activity designation could be obtained and I'm not entirely sure that it couldn't than all issue with minors using it disappear. I wouldn't proceed without a private ruling first though.
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The table is exactly the breakup I was envisaging. - Thanks.
I hope I haven't unintentionally offended you as I have mused over how I might utilise your idea.
FXL is another one to add to the list today. 3.92% yield grossed up. Would probably need an index hedge again
Comparables for FXL are TSM, CCV and TGA. None of them terribly liquid for hedging however.
Had a look at TSM and CCV last night. Not sure if I could even short them.
I wonder how effective an index hedge is on a day like today. Typically a bullish day like today will have some follow through tomorrow (at least on the open). An index hedge would struggle to match a stock hedge with a poor relative strength for the day.
Nice strategy skc, I'll be following this thread with interest.
Trade #11 (Mock trade only)
Buy 50,000 BSA @ $0.235. Dividend 2c, 100% yield, gross = 12.2%
Short Index 4 @ $4100
I'm personally in the following today-
GWA (5.5%) Short CSR
TOL (4.09%) Possible shorts- QRN or AIO
FLT (3.5%) Possible short- QAN
Haven't placed the TOL and FLT short hedges yet. Will probably wait until the afternoon until the market settles or shows some signs or weakness.
All good solid choices, Sammy. FLT works also with AIX and MAP historically while TOL has decent performance as a pair with LEI and QAN.
Plenty of ex-div on Monday. AHE and DVN might aslo worth a play.
Sammy, why don't you share here the prices of your entry and exit and I will list them on my spreadsheet (since I am not trading these for real for this season anymore). I will just assume you did $10k positions.
Buy 4580 GWA @ 2.18
Sell 4270 CSR @ 2.33
Buy 514 FLT @ 19.526 (Had 2 entries so avg price)
Sell 6265 QAN @ 1.59
Buy 2115 TOL @ 4.72
Sell 3010 QRN @ 3.32
All were actual entries and yes I use $10k. I'm pretty disappointed with entries today. Read the market completely wrong. Will be hard to make any decent profit with how far CSR, FLT and TOL already drifted.
Thanks Sammy. Great stuff. Le's see what Monday brings...
Buy 4580 GWA @ 2.18
Sell 4270 CSR @ 2.33
Buy 514 FLT @ 19.526 (Had 2 entries so avg price)
Sell 6265 QAN @ 1.59
Buy 2115 TOL @ 4.72
Sell 3010 QRN @ 3.32
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