Money and Finance
It's about time for another look at possible put option moves to get a better entry price or for added income. All calculations are based off of prices from March 20, 2012.
Today I'll be looking at Bank of America. I still have high regard for high capital gains returns. I know it's not necessarily a solid dividend stock right now but at current prices you could be getting a great yield on cost due to the increase in the dividends to go along with solid capital gains. The current price for Bank of America is $9.82 giving a 0.40% current dividend yield.
I currently own shares of BAC and wish I had picked up more at cheaper prices. I think within a 2-3 year time frame you could still be looking at a double or triple from today's prices. If you're looking to not have the shares put to you then go with the lowest strike price for the put. Personally I would go for something that's around a 50/50 chance of getting exercised as long as you still get a good discount versus purchasing the shares outright at current prices. I like the May $10 strike put since you still have 6.42% downside protection before you would begin to lose money and if the stock continues to go up as I think it will you'd be looking at a 5.42% return in a little less than 2 months.
*Assumed 25% tax bracket and the commission costs of $8.70 that I would pay.
- Selling Puts For Added Income
This morning Archer-Daniels Midland was trading at $26.97. Since I would like to get more into the stock with it trading around a 14% discount to my calculated fair value, I figured I would check out the potential option moves to make. The fair value...
- Selling Puts For Added Income
Today I'll be looking at Medtronic. Medtronic's current price is $38.70 and is a Dividend Aristocrat with 34 consectutive years of raising their dividend. The lowest of their 1, 3, 5 and 10 year dividend growth rates is 8.7% with the highest at...
- Selling Puts For Added Income
It's about time for another look at possible put option moves to get a better entry price or for added income. All calculations are based off of the close from February 28, 2012. The current price for Waste Managerment is $35.20 giving a 4.03% current...
- Selling Puts For Added Income
It seems that the market is trying to decide whether it should have a pullback or not. This doesn't make for the best time to sell puts if you're looking to just collect the premium but if you want to get the stocks at a set price it could prove...
- Selling Puts For Added Income
I wish I had more capital to put to work right now because I've found some interesting put option moves that can give some solid return on otherwise idle capital. All information is based off the closing values from February 8, 2012. The current price...
Money and Finance
Selling Puts for Added Income
It's about time for another look at possible put option moves to get a better entry price or for added income. All calculations are based off of prices from March 20, 2012.
Today I'll be looking at Bank of America. I still have high regard for high capital gains returns. I know it's not necessarily a solid dividend stock right now but at current prices you could be getting a great yield on cost due to the increase in the dividends to go along with solid capital gains. The current price for Bank of America is $9.82 giving a 0.40% current dividend yield.
| Strike Price | Option Price | Cost Basis if exercised | Total Return if Expires | CAGR if Expires | YOC if exercised |
|---|---|---|---|---|---|
| $9.00 | $0.22 | $8.78 | 1.11% | 13.89% | 0.45% |
| $10.00 | $0.64 | $9.36 | 4.15% | 61.44% | 0.42% |
| Strike Price | Option Price | Cost Basis if exercised | Total Return if Expires | CAGR if Expires | YOC if exercised |
|---|---|---|---|---|---|
| $9.00 | $0.36 | $8.64 | 2.28% | 14.95% | 0.46% |
| $10.00 | $0.81 | $9.19 | 5.42% | 38.68% | 0.43% |
I currently own shares of BAC and wish I had picked up more at cheaper prices. I think within a 2-3 year time frame you could still be looking at a double or triple from today's prices. If you're looking to not have the shares put to you then go with the lowest strike price for the put. Personally I would go for something that's around a 50/50 chance of getting exercised as long as you still get a good discount versus purchasing the shares outright at current prices. I like the May $10 strike put since you still have 6.42% downside protection before you would begin to lose money and if the stock continues to go up as I think it will you'd be looking at a 5.42% return in a little less than 2 months.
*Assumed 25% tax bracket and the commission costs of $8.70 that I would pay.
- Selling Puts For Added Income
This morning Archer-Daniels Midland was trading at $26.97. Since I would like to get more into the stock with it trading around a 14% discount to my calculated fair value, I figured I would check out the potential option moves to make. The fair value...
- Selling Puts For Added Income
Today I'll be looking at Medtronic. Medtronic's current price is $38.70 and is a Dividend Aristocrat with 34 consectutive years of raising their dividend. The lowest of their 1, 3, 5 and 10 year dividend growth rates is 8.7% with the highest at...
- Selling Puts For Added Income
It's about time for another look at possible put option moves to get a better entry price or for added income. All calculations are based off of the close from February 28, 2012. The current price for Waste Managerment is $35.20 giving a 4.03% current...
- Selling Puts For Added Income
It seems that the market is trying to decide whether it should have a pullback or not. This doesn't make for the best time to sell puts if you're looking to just collect the premium but if you want to get the stocks at a set price it could prove...
- Selling Puts For Added Income
I wish I had more capital to put to work right now because I've found some interesting put option moves that can give some solid return on otherwise idle capital. All information is based off the closing values from February 8, 2012. The current price...