Today at the close of the market I entered into the following trade:
03/28/2012 STO 2 JNJ Jul 21 2012 62.5 Puts @.95 178.51
JNJ, one of the bluest of the blue chip Dividend Champions, was trading at just under 65 at the time I entered this trade. If these puts expire worthless we will earn $178.51 in 115 days on ~$2200 of margin maintenance. This equates to an 8.1% return on maintenance or 25.7% annual. JNJ currently yields 3.5% and it's set to hike it's dividend next quarter. If put to me the yield on cost will be around 4%. These puts were written near JNJ's support level. If the stock drops I feel confident I will be able to roll out and down for a net credit. As such, I have an exit strategy in place.
Great stock great trade
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