A couple of days ago in a taxable account I continued the following transaction:
02/09/2012 STO 2 PEP Mar 17 2012 62.5 Puts @.7 128.51
03/06/2012 BTC 2 PEP Mar 17 2012 62.5 Puts @.63 -137.48
03/06/2012 STO 2 PEP July 21 2012 60 Puts @1.58 314.36
With a drop in PEP price below 62.5, I rolled this position for a unique reason. I'm too busy right now with my business to monitor these trades and I'm going on vacation next week during option expiration and won't have good computer access. I rolled out and down for a net credit. If put to me my cost basis will be ~58.50/share and Pepsico is set for another dividend raise so the yield on cost will be a juicy 3.75% or so. In my opinion, that ain't gonna happen. If it does I feel great about this becoming a great enhanced income, double dividend candidate. In other words I'll start writing covered calls on the position collecting option premium and dividends. BTW for this trade we are using $2257.77 in margin maintenance. If they expire worthless we will earn $305.39 in 171 days which equates to 13.53% or 28.87% annual.
Here comes pepsico.
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