Money and Finance
Obviously the most important part about investing is finding the truly great companies that have the ability to grow profits and dividends for decades on end. Once you identify those companies through a qualitative analysis the next step I like to take is a fundamental analysis to determine what a "fair value" for the company's shares is. After you determine what price you'd be willing to pay for the future growth and income stream that a company provides you can see where the current share price lies on the value spectrum, i.e. whether shares are under, fairly, or over valued. There's two ways to enter into a position, you can either purchase shares outright or you can write/sell put options. My preferred method is open market purchases but sometimes the value just isn't there and put options give
By selling a put option you are selling someone the right to sell shares of a company at a predetermined price. Now no one is going to give up their "option" for free so in return the seller receives an option premium. We'll use Coca-Cola (KO) (Full Analysis Here) since shares are currently trading for about a 1.50% premium to my fair value calculation of $40.75. If I'm a stickler for not paying more than what I deem to be a fair value price then Coca-Cola wouldn't be a possibility right now unless I use put options. Let's look at the options that expire September 26th.
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- Recent Transaction
With today being expiration Friday, I figured we'd revisit the call options that I sold on 200 shares of Bank of America back in mid-August. I originally performed a buy-write of 200 shares which involves purchasing the shares and simultaneously...
- 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...
- Intel Put Option
With Intel currently trading at $25.60 it looks like my put option that I sold on Intel is going to expire today. It's a good and bad thing because I wouldn't have minded getting Intel at the $25 strike less the premium. But I got a pretty good...
- Option Strategy
I have 2 option strategies that I like the most and then a third that I don't have enough positions built up to think about at the time. 1. I like selling put options since you can essentially set your entry price and get paid a premium to wait for...
- Option Buyback?
Back in the beginning of February I sold a call option for HAL with a strike price of $42 for $1.60. The option expires on July 20th. Based on the sale if the option expired I would have earned $151.97 over about 5 months. This would have been a total...
Money and Finance
The Best of Both Worlds: Put Options
Obviously the most important part about investing is finding the truly great companies that have the ability to grow profits and dividends for decades on end. Once you identify those companies through a qualitative analysis the next step I like to take is a fundamental analysis to determine what a "fair value" for the company's shares is. After you determine what price you'd be willing to pay for the future growth and income stream that a company provides you can see where the current share price lies on the value spectrum, i.e. whether shares are under, fairly, or over valued. There's two ways to enter into a position, you can either purchase shares outright or you can write/sell put options. My preferred method is open market purchases but sometimes the value just isn't there and put options give
By selling a put option you are selling someone the right to sell shares of a company at a predetermined price. Now no one is going to give up their "option" for free so in return the seller receives an option premium. We'll use Coca-Cola (KO) (Full Analysis Here) since shares are currently trading for about a 1.50% premium to my fair value calculation of $40.75. If I'm a stickler for not paying more than what I deem to be a fair value price then Coca-Cola wouldn't be a possibility right now unless I use put options. Let's look at the options that expire September 26th.
Read more »
- Recent Transaction
With today being expiration Friday, I figured we'd revisit the call options that I sold on 200 shares of Bank of America back in mid-August. I originally performed a buy-write of 200 shares which involves purchasing the shares and simultaneously...
- 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...
- Intel Put Option
With Intel currently trading at $25.60 it looks like my put option that I sold on Intel is going to expire today. It's a good and bad thing because I wouldn't have minded getting Intel at the $25 strike less the premium. But I got a pretty good...
- Option Strategy
I have 2 option strategies that I like the most and then a third that I don't have enough positions built up to think about at the time. 1. I like selling put options since you can essentially set your entry price and get paid a premium to wait for...
- Option Buyback?
Back in the beginning of February I sold a call option for HAL with a strike price of $42 for $1.60. The option expires on July 20th. Based on the sale if the option expired I would have earned $151.97 over about 5 months. This would have been a total...