On October 22, 2012 I entered into the following transaction:
10/22/12 STO 2 PEP Dec 22 67.5 Puts @.8 $148.46
This is a 59 day trade that uses ~$2600 in margin maintenance. Pepsi had showed a bit of weakness after issuing it's quarterly report. If these puts expire worthless we will earn 5.71% in 59 days or 35.32% annual return on maintenance. If the shares our put to us our yield on cost will be 3.2%.
Showing posts with label PEP naked puts. Show all posts
Showing posts with label PEP naked puts. Show all posts
Monday, November 5, 2012
Friday, March 23, 2012
Profitable Trade: Pepsico (PEP) Naked Puts
Two days ago in a retiree's taxable account we closed the following trade for a profit:
02/09/2012 STO 3 PEP Apr 21 2012 60 Puts @.54 149.71
03/21/2012 BTC 3 PEP Apr 21 2012 60 Puts @.05 -15.04
In this trade we earned $135.73 in 40 days on ~$2500 in margin maintenance. This equates to a 5.4% return on maintenance or 49.27% annual. We got to the point where we could close the trade without commissions and look to put the money to work somewhere else. On both of the Pepsico trades our strategy of selling puts after a disappointing quarterly report paid off. It is my experience that when these Dividend Champion, blue chip stalwarts sell off after a quarterly report it provides an opportunity as they usually drift back up to where they were before the report was released as one quarter does not a blue chip make.
02/09/2012 STO 3 PEP Apr 21 2012 60 Puts @.54 149.71
03/21/2012 BTC 3 PEP Apr 21 2012 60 Puts @.05 -15.04
In this trade we earned $135.73 in 40 days on ~$2500 in margin maintenance. This equates to a 5.4% return on maintenance or 49.27% annual. We got to the point where we could close the trade without commissions and look to put the money to work somewhere else. On both of the Pepsico trades our strategy of selling puts after a disappointing quarterly report paid off. It is my experience that when these Dividend Champion, blue chip stalwarts sell off after a quarterly report it provides an opportunity as they usually drift back up to where they were before the report was released as one quarter does not a blue chip make.
Profitable Trade: Pepsico (PEP) Naked Puts
Today in a taxable account I closed the following trade for a profit:
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
03/23/2012 BTC 2 PEP July 21 2012 60 Puts @.6 -131.48
We made $173.91 in 42 days on ~$1800 in margin maintenance. This is a 9.66% return on maintenance or 83.94% annual. I could have waited it out and slowly let these puts expire worthless but we had wrung the fast money out of the trade and I'm looking for other places to use the money to get a higher return.
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
03/23/2012 BTC 2 PEP July 21 2012 60 Puts @.6 -131.48
We made $173.91 in 42 days on ~$1800 in margin maintenance. This is a 9.66% return on maintenance or 83.94% annual. I could have waited it out and slowly let these puts expire worthless but we had wrung the fast money out of the trade and I'm looking for other places to use the money to get a higher return.
Thursday, March 8, 2012
Trade Continuation: Pepsico (PEP) Naked Puts
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.
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.
Tuesday, February 28, 2012
New Trade: Walgreen's (WAG) Naked Puts
Yesterday in a taxable account I entered into the following transaction:
02/27/2012 STO 4 WAG Mar 17 2012 32 Puts @.23 78.99
Walgreen's is a Dividend Champion, Achiever and Aristocrat. It has been trading in a narrow range and I took advantage of a drop in price to write these puts. If these expire worthless we will earn 3.64% on $2165.25 in margin maintenance or 69.92% annual. If the stock drops it looks like these puts can be rolled down and out for a net credit.
02/27/2012 STO 4 WAG Mar 17 2012 32 Puts @.23 78.99
Walgreen's is a Dividend Champion, Achiever and Aristocrat. It has been trading in a narrow range and I took advantage of a drop in price to write these puts. If these expire worthless we will earn 3.64% on $2165.25 in margin maintenance or 69.92% annual. If the stock drops it looks like these puts can be rolled down and out for a net credit.
Saturday, February 11, 2012
New Trade: Pepsico (PEP) Naked Puts
Two days ago in a retiree's taxable account I entered into the following trade:
02/09/2012 STO 3 PEP Apr 21 2012 60 Puts @.54 149.71
I entered into this trade when PEP had tanked down to 64 after it's quarterly report. As stated in my prior post, it has been my experience that when blue chip Dividend Champions release a quarterly report which disappoints it may tank briefly before rising to it's prior price. These were written well below the tank and if put to us the yield on cost will be 3.46% with a dividend rise expected in June. If these puts expire worthless we will earn 5.34% in 73 days on $2800 of margin maintenance which equates to 26.7% annual. If the stock tanks all the way to 60 or below I am confident we can roll the position for a credit.
02/09/2012 STO 3 PEP Apr 21 2012 60 Puts @.54 149.71
I entered into this trade when PEP had tanked down to 64 after it's quarterly report. As stated in my prior post, it has been my experience that when blue chip Dividend Champions release a quarterly report which disappoints it may tank briefly before rising to it's prior price. These were written well below the tank and if put to us the yield on cost will be 3.46% with a dividend rise expected in June. If these puts expire worthless we will earn 5.34% in 73 days on $2800 of margin maintenance which equates to 26.7% annual. If the stock tanks all the way to 60 or below I am confident we can roll the position for a credit.
New Trade: Pepsico (PEP) Naked Puts
A couple of days ago in a taxable account I entered into the following trade:
02/09/2012 STO 2 PEP Mar 17 2012 62.5 Puts @.7 128.51
At the time I entered into this transaction PEP had tanked more than two points down to ~64 based upon it's quarterly report. My experience has been that when a blue chip stalwart tanks after a quarterly report it usually is a knee jerk reaction and it will slowly work it's way back. I wrote the puts under where it tanked and if it tanks more I feel that I will be able to roll the position for a credit and wait for the stock to drift back up. If put to me the yield on cost would be 3.3% with a dividend raise expected in the June quarter. If these puts expire worthless we will earn $128.51 in 38 days on margin maintenance of $2400. This equates to a 5.35% return or 51.4% annual.
02/09/2012 STO 2 PEP Mar 17 2012 62.5 Puts @.7 128.51
At the time I entered into this transaction PEP had tanked more than two points down to ~64 based upon it's quarterly report. My experience has been that when a blue chip stalwart tanks after a quarterly report it usually is a knee jerk reaction and it will slowly work it's way back. I wrote the puts under where it tanked and if it tanks more I feel that I will be able to roll the position for a credit and wait for the stock to drift back up. If put to me the yield on cost would be 3.3% with a dividend raise expected in the June quarter. If these puts expire worthless we will earn $128.51 in 38 days on margin maintenance of $2400. This equates to a 5.35% return or 51.4% annual.
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