New Trade: Sold General Electric (GE) Puts

This afternoon with GE down to $15.60 and the DOW down 170 points to 11736.21 I entered into the following transaction:

11/17/11  Sold 3 GE Jan 21 14 Puts@.49             +134.75

I'm happy to own GE at 14. In fact, if put to me my cost basis will be ~13.75 after commissions. The dividend yield on $13.75 is 4.4%. GE's dividend is back on the rise. If the puts expire worthless this is a 3.2% return in 5 weeks which equates to ~32% annual. The maintenance requirement to begin with is only $533.24 and for those that calculate return on margin (ROM) the return is a ridiculous 25.27% or ~250% annual. In the recent past GE only fell to 14 once and then bounced right back up so I'll be surprised if the shares are put to me.

I have to admit it is nice to only pay one commission to enter into this trade as opposed to paying twice to enter a covered call investment.