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June 22, 2011
Edited: June 22, 2011
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PM (Phillip Morris) PUT 20AUG 62.50
Excellent opportunity today as tobacco stocks are down.
Yesterday, came close to writing this put but didn't get my limit price. I have another limit order in today at even a better price. Tobacco stocks are down due to the new graphic warning labels announced in the US. PM however is down due to going ex-dividend yesterday. PM sells cigarette outside the US and is unaffected by yesterday's action for cigarettes sold in the US. Hoewever, since all tobacco stocks are getting slammed today, PM is going with them. If I don't get my limit price this morning, I might have to let up a little and get it at a lower premium. I will update this blog throughout the day today.
YUM PUT 20AUG 50
I also have submitted a limit order to write a put on YUM. I like the premium at this point. YUM pays a small dividend of 1.80% and goes ex-div on Jul 13. However, I do not seeing it diping too low due to the low dividend amount. 49.50 has been a good support number for YUM. Should I get assigned I should be able to sell the stock through covered call writing as I will be in the low range for this stock.
One thing about YUM. It reports earnings on Jul 13. A negative surprise earnings report will drive the stock downward. There is nothing however to expect this to happen. Last year, at the same time, YUM has a positive surprise earnings report.
MO put 20AUG 26
Actually, with tobacco stocks down today, I would not mind adding to my position on MO. Instead of buying another 100 shares, writing a put to sell the AUG 26's will provide me with a premium. Getting assigned is the plan at a lower price, 26 instead of the current share price of 27.15.