Scotia Stock BNS 2012 Trades

Scotia Stock (BNS) is in both my RRSP (Retirement Portfolio) and my Canada Stock Portfolio where I do put selling. In my retirement portfolio I sell covered calls against Scotia Stock because in Canada the law prohibits put selling or cash secured put selling in a retirement portfolio.

Scotia Stock trading symbol is BNS. BNS Stock trades on both New York and Toronto. I trade Scotia stock and options primarily on the Toronto Stock Exchange. Once in a while the options will be better in the USA on Scotia Stock, so I will take advantage and sell puts in the USA instead of Canada.

There is a lot to like about Scotia Stock. Bank Of Nova Scotia is the third largest bank in Canada. With assets over 50 billion it is the only Canadian Bank with a strong presence in South America, Central America and Asia but with almost no presence in the United States. Bank of Nova Scotia wrote down about 893 million due to the credit crisis of 2008 to 2009. When Scotia Stock did fall in 2008 I bought shares in December for $30.00 and then in March 2009 I bought more Scotia Stock at $26.00. I felt the dividend was solid and I did not expect a dividend cut. At $26.00 BNS Stock dividend was paying 7.5%. These shares I have tucked away for my children and will not be selling options against them. Select this Scotia Stock link to read more about Scotia Bank Investor Relations.  Select this Scotia Stock link to read a brief history of Bank Of Nova Scotia.

Scotia Stock (BNS) Strategy for 2012: I am very unconcerned about holding this stock long-term. For me long-term means anywhere from months to years. Therefore the strategy being employed is simple and straight forward. I sell puts at the money or slightly out of the money until assigned shares. If assigned shares I sell covered calls to be exercised out of those shares. If the stock should fall too low I may purchase some shares and sell them on a bounce. I will often roll my naked puts if they fall into the money with any decline in the stock and I do expect the stock to fluctuate throughout the year.

Scotia Stock (BNS)Trades For 2012

Canada Stock Portfolio

Scotia Stock Goal for 2012: 12%
Capital Currently In Use: $66039.75
Income Earned in 2012: $4822.25
Total Income Earned Since Trade Started In 2009: $7657.50
Total Of My Own Capital Required If All Naked Puts Were Assigned: $58382.25
Number Of Shares If All Naked Puts Were Assigned: 1300
Share Price Valuation (Total Capital Required/Number of shares): $44.91

Date Stock At
Time Of
Scotia Stock Action Taken (All Figures Are Canadian Dollars)
Comm. Shares
In Use
Gain/Loss Total
Dec 2 2011 49.05 Sold 5 Naked Puts 21JAN12 $44 for .55 (status: expired) 13.25 0 22013.25 261.75 261.75
Dec 5 2011 48.40 Sold 5 Naked Puts 21APR12 $50 for $4.00  (status: closed for .09 Mar 15 2012) 13.25 0 25013.25 1986.75 2248.50
Dec 19 2011 48.80 Sold 5 Naked Puts 17FEB2012 $48 for $1.50
Final Scotia Bank Trade for 2011  (status: closed for .09 Feb 2 2012)
13.25 0 24013.25 586.75 2835.25

Jan 17 2012 51.80 First Scotia Stock trade for 2012
Sold 5 Naked Puts 21APR12 $50.00 for $1.68  (status: closed for .09 Mar 15 2012)
13.25 0  25013.25 826.75 3662.00
Jan 20 54.01 Options expiry: All Jan options expired out of the money 3662.00
Feb 1 51.88 Sold 5 Naked Puts 21Jul12 $50 for $2.15 (status: active) 13.25 0  25013.25 1061.75 4723.75
Feb 2 50.90 Sold 5 Naked Puts 17MAR12 $50 for .86 (status: expired) 13.25 0  25013.25 416.75 5140.50
Feb 2 51.10 Bought to close (BTC) 5 Naked Puts 17FEB12 $48 for .09 13.25 0 (58.25) 5082.25
Feb 3 51.75 Sold 3 Naked Puts 19JAN13 $50 for $3.60 (status: active)
Comment: To Understand this Scotia Stock put selling trade read this article
13.25 15013.25 1066.75 6149.00
Mar 6 53.00 Sold 5 Scotia Stock Naked Puts 20OCT12 $52 for $3.25 13.25 26013.25 1611.75 7760.75
Mar 15 55.00 Bought to close (BTC) 10 Naked Puts Scotia Stock 21APR12 $50 for .09 13.25 (103.25) 7657.50


Scotia Stock (BNS Stock) 5 Year Chart

Looking at the 5 year Scotia Stock chart below (BNS Stock) you can see that $50.00 is an excellent strike for put selling. I have also marked the Scotia Stock trades I did in December 2008 and March 2009 when I believed Scotia Stock (BNS Stock) was very under-valued. Looking at the amount of volume during that period it would appear that I was not alone in believing that Scotia Stock was very under-valued when it fell below $30.00

Scotia Stock (BNS Stock) 2007 to 2012

Scotia Stock (BNS Stock) Chart Showing 2007 to 2012

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  • bc investor

    Hi, the sale of a “cash secured put” is not specifically disallowed by the ccra. I finally got Scotiaonline to admit this last year, but no brokerage house seems to want to take the step to allow us to do so.

    If you have 10k cash in your RRSP you can place a limit buy for say 8k and your available cash will decrease to 2k so it seems ludicrous to not be able to sell a cash secured put. The following is the specific wording from IT320r3 regarding the sale of puts.

    Where a plan trust sells (writes) a call option or a put option, there is merely an obligation on the plan trust to sell or buy the property at the agreed upon price should the holder of the call or put option so require. As no property has been acquired by the plan trust, the issue of whether such an option is a qualified investment is not relevant.

    I’d gladly transfer my RRSP to the first online brokerage house allowing us to utilize cash secured puts inside my RRSP

  • It is completely silly that the brokerages do not understand put selling. Cash secured puts selling is a terrific strategy that I would love to see put to use in an RRSP. Thank you for your comments.

  • Walter

    Hi Teddy about this issue of “put” selling inside a RRSP the rules from CCRA is pretty clear in that they are concerned that its carrying on a business as “23. The writing of a naked call option, whereby a plan trust sells a call option in respect of an underlying property which it does not own, may result in the plan trust being considered to be carrying on a business. The same result may arise where a plan trust engages in a short sale, i.e., the plan trust sells property that it does not own. An RESP that is carrying on a business is revocable. An RRSP or a RRIF will be liable for income tax on its taxable income for any year in which it is carrying on a business.” hence silliness from these accountants.

  • Yes sadly the Canadian tax man just does not understand the idea of cash secured puts. Our neighbors to the south though have a distinct advantage with being able to sell puts in their IRAs. Thanks for your advice.