Today with the markets in the red and Walgreen's trading down at $30.80 I entered into the following transaction:
5/30/12 STO 3 WAG Jul 21 2012 28 Puts @.41 $110.75
The margin maintenance is ~$1,000 for this 52 day trade. This equates to ~11% return on margin in 52 days or 77.21% annual if they expire worthless.
WAG has had great support at the 31 level and these puts are a full 10% below that. If put to us the yield on cost will be 3.25% which is way above historical highs for this Dividend Champion.
It appears that low beta stocks are ideal for earning income when using naked options.
ReplyDelete