(02-19-2019, 09:04 AM)fenders53 Wrote: CVS- On JAN 29 I sold a FEB 22 Strike 64 put for $1.42 after commission. CVS traded around 65.50 at the time. About 69 today and this one likely expires worthless on Friday. If I needed the cash for a better trade or stock purchase I'd close this one out now. 2.2% return for 21 day hold. I'd like to hold some CVS shares so barring a pullback this one got away for now. But I won't go broke taking income like this. Low risk option IMO.Pardon me while I adjust yesterday's risk profile from low to moderate.
That forward guidance was pretty rough. Looks like I will likely be in CVS in the low 60's. I'm OK with that as I like the Aetna merger plan and sub 11 PE. But if I had a crystal ball I'd rather write the put contract now instead of several weeks ago. It should be noted if this was purely an income put should have been bought back yesterday for as low as 13 cents. The position was profitable within a few days of selling it. Buying a stock just before earnings comes with some short-term risk. The only thing I gained here is not paying $65.50 two weeks ago, because I highly doubt if CVS will be that high in a few days.