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June 8, 2011
Edited: June 8, 2011
Share ThisWe did not get our limit trade on T (SELL PUT 20aug11 $29), missing it by 3 cents. In a way we are happy as we are now looking at the 20Aug $28's sell puts.
Ordinarily I would not try to catch a near term ‘falling knife’ stock like T. However, in this case I may be willing to make an exception. Why? Because I believe it is oversold and due for a bounce. It closed yesterday (Tuesday) at $30.36. The strike price 28.
Also, I wouldn’t mind owning T at $28.00. At $28.00 T would be yielding at around 6.14%. Being assigned T at 28.00 actually makes my cost 27.57 (0.43 premium rcvd on selling put) That makes my div yield 6.23%. That’s a gift! However, T hasn't been down to 28 since mid March. I expect not to get assigned and just walk away with the premium on the put. T is not going to go out of business anytime soon.
Updated:
Visa (V) During the session a wonderful opportunity came about with V. Visa has been weak for the past few sessions, along with most of the market. However VISA is a special case as congress continues to try to decide what to do about debit fees. Selling (1)put contract at the $72.50 strike is an easy choice for 7 more trading sessions before expiration. Visa has good support in the 70 range.
Earlier in the day one could have rcvd a prem of .82, when I got in my trade went with a premium of .70. In otherwards someone is paying me $70 a contract to possibly be assigned to buy Visa (V) at 72.50 between now and Jun 18. Visa today is trading in the 76 to 77 range although it dipped down to below 75. Our position was hit at 14.10.50 ET. The high so far today was 1.00 prem vs .32 low so far.
06/08/2011 Sell 1.0000 V 06/18/2011 72.50 P PUT VISA INC CL A $72.50 EXP 06/18/11 $0.70000
Old Business footnotes:
We continue to hold our position on INTC sell put. It looks more and more we will walk away with the premium credit received without being assigned.
Selling a put in its most basic form is selecting a strike price for the put option, selling that put strike which then gives someone the right to sell you (assign) the stock to you at the strike price you have sold.
