New Trade: Intel (INTC) Naked Puts

This afternoon with the market down ~80 points and Intel down to ~$25.70 I entered into the following transaction:

08/22/12   STO 5 INTC Oct 20 2012 24 Puts @.37   $171.18

Buffett just sold his stake in Intel. Bill Cara  just sold his stake. Fear and uncertainty is setting in for Intel. I took this opportunity to write puts a point below the 25 support level.

This is a 59 day trade which will initially take $1700 in margin maintenance. If the puts expire worthless, return on maintenance will be 10% in 59 days or 61.86% annual. If put to us our yield on cost will be 3.8%. That yield should buoy the stock absent unforeseen market conditions. In the event the stock tanks we will look to roll down and out for a net credit. As such, an exit strategy is in place.