Running_Man
Thinks s/he gets paid by the post
- Joined
- Sep 25, 2006
- Messages
- 2,844
Dipping my toes into this arena inspired by NW-BOUND in the description of the strategy to gain income on idle funds, for the first time I have decided to sell calls and puts, I have purchased them on multiple occassions but the recent interest rates make these far more interesting to me.
So I sold one Pepsi 142 expires July 23 put yesterday for 83.30 bucks based on my thoughts of trying to see how easy it is to predict I could pick up money without getting the stock put to me, which I already own. But I viewed the recent price ac'tion and thought the decline would not carry to 142 and if it did it is a stock well into my buy zone. If I calculated this right it is about 10% return for the fund committment on an annual basis.
I had also been looking at purchasing more of my favorite stock which has been falling IDA. I had been waiting for the stock to get back to a 3% yield @ 94.67 and had alerts set for if it hit 95 and decided to instead sell a put, so I sold an August 20th 95 put for $1.93 and instead of entering a GTC order for 94.67 I will get paid $193 if the stock falls below the range, which I calculated as 14.4% annual rate for the funds if the stock is not put to me.
Now as I understand it is possible IDA could fall to 94 or so for a day or 2 and recover to 98 and I will not get the stock with the put option that I would get with a GTC option, but with nearly 3 quarters of stock dividend income and already having a position in IDA, for selling the put I am willing to take that risk. IDA I feel has a pretty decent chance of falling possibly even as low as 87 and still be in the long term uptrend, so I think it is at least 50-50 I fill on this. I view this stock if I get it as being unlikely to be sold any time in the next 10 years barring a major change in the direction of the company, which could occur, but is not anywhere in my expectations for the moment.
No covered calls yet as I view the market as ripe for potentially large moves to the upside and will hold onto the stocks for now. No need to get my knees wet until I see if my toes get chewed off.
Comments other Selling Covered Calls and Naked Put strategies and results are welcome.
So I sold one Pepsi 142 expires July 23 put yesterday for 83.30 bucks based on my thoughts of trying to see how easy it is to predict I could pick up money without getting the stock put to me, which I already own. But I viewed the recent price ac'tion and thought the decline would not carry to 142 and if it did it is a stock well into my buy zone. If I calculated this right it is about 10% return for the fund committment on an annual basis.
I had also been looking at purchasing more of my favorite stock which has been falling IDA. I had been waiting for the stock to get back to a 3% yield @ 94.67 and had alerts set for if it hit 95 and decided to instead sell a put, so I sold an August 20th 95 put for $1.93 and instead of entering a GTC order for 94.67 I will get paid $193 if the stock falls below the range, which I calculated as 14.4% annual rate for the funds if the stock is not put to me.
Now as I understand it is possible IDA could fall to 94 or so for a day or 2 and recover to 98 and I will not get the stock with the put option that I would get with a GTC option, but with nearly 3 quarters of stock dividend income and already having a position in IDA, for selling the put I am willing to take that risk. IDA I feel has a pretty decent chance of falling possibly even as low as 87 and still be in the long term uptrend, so I think it is at least 50-50 I fill on this. I view this stock if I get it as being unlikely to be sold any time in the next 10 years barring a major change in the direction of the company, which could occur, but is not anywhere in my expectations for the moment.
No covered calls yet as I view the market as ripe for potentially large moves to the upside and will hold onto the stocks for now. No need to get my knees wet until I see if my toes get chewed off.
Comments other Selling Covered Calls and Naked Put strategies and results are welcome.