Profitable Trade: Proctor & Gamble (PG) Naked Puts

The following puts just expired worthless:

03/29/2012    STO 2 PG July 21 2012 62.5 Puts @.88      164.47

This was a 114 day trade with an average of ~2300 in margin maintenance. Our return on maintenance is  7.15% or 22.9% annual. I thought about rolling out the 62.5's but decided against it with the recent surge in  the stock due to the Ackman intervention. In addition, I believe long term that Costco and Wal-Mart and their brand of products will continue to take market share from the more expensive PG products. That being said I will still sell out of the money puts when fearful dumping of PG stock occurs.

I'm smelling opportunity in PG *sniff*

Proctor & Gamble is slowly sinking following an unexciting quarterly report. Today it is at 63 and change. There are the usual pundits out there calling for big trouble. My take? Like we just saw with Pepsico, one quarterly report does not a blue chip make. Like Pepsico I think that once PG consolidates and finds a bottom a great put selling opportunity will be in place. With the recent dividend rise PG's yield above 3.5% should buoy the stock. I'm waiting for the consolidation and then I'm looking at the 60's or if worthwhile the 57.5's. Strong support is at the 57.5 level. For you thrill seekers the 62.5's might be interesting. You can always roll down and out for a credit if you don't go out too far on the strike date.

On a side note the recent bribery allegations make Wal-Mart another interesting blue chip dividend stock to watch.