(02-15-2019, 01:09 PM)crimsonghost747 Wrote:(02-15-2019, 12:44 PM)fenders53 Wrote: What do you think of this move? ....
Sold a JUN put strike 16 for 1.15. That's about 20% annualized. Today I am real good with being assigned NWL at a sub $15/SH basis. Dividend would be very good.
Sold a SEP put strike 17 for 2.10. That's more than two years of NWL Div in my pocket today so I am feeling good with the risk reward on this one. It's OK to disagree, but I'll move the premiums to my ultra short bond fund now.
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But if you are pocketing around 20% annualized then as long as you do not get assigned it works wonders. And if you do get assigned then it all depends on what the real price is then. :p
Selling a put to buy a stock is always less risky than just buying the stock. If it expires ITM you bought the stock for strike price minus the premium you collected. Now you own the stock cheaper. XYZ stock today=$45.00, sell a 44 put for .62. Your breakeven is 43.38. Yes, you may get assigned at $42.00. Still better than if you purchased XYZ for 45.00
If the put expires OTM, you keep the premium and do it again.