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 the close from February 28, 2012.
The current price for Waste Managerment is $35.20 giving a 4.03% current dividend yield.
I currently own shares of WM and would like to add more. I like the potential of these puts. You can get a solid return on the $35 and $36 puts with good downside protection considering it the money would only be at risk for a little over 2 weeks. If I had the money in my account it would be tough to decide which is the best to go with. I think I would probably sell the $36 put to try and get more income since I don't expect a big runup in the market for the time being. I fully expect a pullback to rear its head sometime soon but there's no telling when that will happen. The $36 put gives you 1.14% of downside while returning 2.32% if it expires.
I feel that the elusive market pullback is still coming which means now isn't the best time to sell puts if you're looking to just get income. With a sharp pullback there's a good chance that the options would be exercised. While that might not be the best situation for everyone I always look for options that allow good entry price points as well as the possibility for a solid income return should the option expire.
*Assumed 25% tax bracket and the commission costs of $8.70 that I would pay.
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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 the close from February 28, 2012.
The current price for Waste Managerment is $35.20 giving a 4.03% current dividend yield.
| Strike Price | Option Price | Cost Basis if exercised | Total Return if Expires | CAGR if Expires | YOC if exercised |
|---|---|---|---|---|---|
| $34 | $0.23 | $33.86 | 0.32% | 7.47% | 4.19% |
| $35 | $0.57 | $34.52 | 1.04% | 26.51% | 4.11% |
| $36 | $1.20 | $34.89 | 2.32% | 68.77% | 4.07% |
I currently own shares of WM and would like to add more. I like the potential of these puts. You can get a solid return on the $35 and $36 puts with good downside protection considering it the money would only be at risk for a little over 2 weeks. If I had the money in my account it would be tough to decide which is the best to go with. I think I would probably sell the $36 put to try and get more income since I don't expect a big runup in the market for the time being. I fully expect a pullback to rear its head sometime soon but there's no telling when that will happen. The $36 put gives you 1.14% of downside while returning 2.32% if it expires.
I feel that the elusive market pullback is still coming which means now isn't the best time to sell puts if you're looking to just get income. With a sharp pullback there's a good chance that the options would be exercised. While that might not be the best situation for everyone I always look for options that allow good entry price points as well as the possibility for a solid income return should the option expire.
*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 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've been looking around and have found some other potentially lucrative put option plays. All information is based off the closing values from February 10, 2012 and that the puts would be sold the morning of February 13, 2012. The current price for...
- 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...