On Friday before the close with Intel trading at ~24.85 I entered into the following transaction:
08/24/12 STO 5 INTC Oct 20 2012 23 Puts @.35 161.20
This is essentially a one strike down, double down of my trade of a few days ago. I was able to take advantage of weakness/fear in Intel due to the Buffett hangover and weak results from Hewlett-Packard and Dell. If put to us our yield on cost will be right under 4% and we're just one roll away from a yield on cost above 4%. I feel pretty good that a 4% yield will buoy the stock price. In addition, we have strong support at the 25 price level.
This is a 57 day which uses ~$1800 in margin maintenance. If the puts expire worthless we will earn ~8.95% or 57.3% annual return on maintenance. If the stock drops I feel confident we can roll out and/or down for a net credit. As such, an exit strategy is in place.
Great trade on intel
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