Thursday, January 12, 2012

New Trade: Sold Coca-Cola (KO) Puts

Yesterday I entered into the following transaction in a taxable account:

01/11/2011    STO 4 KO Feb 18 2012 65 Puts @ .51                +190.95

Due to some fungus in orange juice, Coca-Cola was very weak yesterday. I took advantage of the opportunity to enter into a trade on this blue chip, dividend champion stock that needs no introduction. The margin maintenance on this trade is $4400. If they expire worthless we will earn $190.95 in 39 days. This equates to a return on margin of 4.34% or 40.61% annual. There is money in this account to purchase the shares if put to us but we'd probably roll for a net credit before we'd allow that to happen. Buying KO at 64.50 ain't a bad thing though.

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