Money and Finance
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 for AT&T is $30.03 giving a 5.85% current dividend yield.
All of these would give an improved cost basis should the stock be exercised and improve the YOC above the current yield. I don't foresee the stock to dip below the effective creation prices but if they were I would be a buyer anyways and would start adding to my position.
The current price for Nucor is $45.31 giving a 3.22% current dividend yield.
The Nucor options seem interesting to me. I know that Nucor has run up a lot since October but there seems to be a huge disconnect between the stock price and the put options market. The puts seem to be expecting the worst which I feel we will be treading water for the most part of this year. Once the global economy starts going again Nucor could be there to capitalize on a sudden increase in demand. The $45 put gives you 5.20% of downside protection before you would start losing money on the option and the $41 gives 11.26% of downside move in the stock.
Both of these make me yearn for more capital to deploy. You can get a 10%+ CAGR on your money on stocks that I would begin buying at the effective creation prices of the puts.
*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 prices from March 20, 2012. Today I'll be looking at Bank of America. I still have high regard for...
- 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...
Money and Finance
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 for AT&T is $30.03 giving a 5.85% current dividend yield.
| Strike Price | Option Price | Cost Basis if exercised | Total Return | CAGR | YOC if exercised |
|---|---|---|---|---|---|
| $30 | $0.89 | $29.20 | 2.01% | 10.61% | 6.03% |
| $31 | $1.59 | $29.41 | 3.64% | 19.87% | 5.97% |
| $32 | $2.46 | $29.54 | 5.56% | 31.60% | 5.94% |
All of these would give an improved cost basis should the stock be exercised and improve the YOC above the current yield. I don't foresee the stock to dip below the effective creation prices but if they were I would be a buyer anyways and would start adding to my position.
The current price for Nucor is $45.31 giving a 3.22% current dividend yield.
| Strike Price | Option Price | Cost Basis if exercised | Total Return | CAGR | YOC if exercised |
|---|---|---|---|---|---|
| $45 | $2.05 | $42.95 | 3.27% | 17.74% | 3.39% |
| $44 | $1.63 | $42.37 | 2.63% | 14.08% | 3.44% |
| $43 | $1.29 | $41.71 | 2.10% | 11.11% | 3.49% |
| $41 | $0.79 | $40.21 | 1.29% | 6.70% | 3.62% |
The Nucor options seem interesting to me. I know that Nucor has run up a lot since October but there seems to be a huge disconnect between the stock price and the put options market. The puts seem to be expecting the worst which I feel we will be treading water for the most part of this year. Once the global economy starts going again Nucor could be there to capitalize on a sudden increase in demand. The $45 put gives you 5.20% of downside protection before you would start losing money on the option and the $41 gives 11.26% of downside move in the stock.
Both of these make me yearn for more capital to deploy. You can get a 10%+ CAGR on your money on stocks that I would begin buying at the effective creation prices of the puts.
*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 prices from March 20, 2012. Today I'll be looking at Bank of America. I still have high regard for...
- 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...