Friday, July 20, 2012

Intel Put Option

With Intel currently trading at $25.60 it looks like my put option that I sold on Intel is going to expire today. It's a good and bad thing because I wouldn't have minded getting Intel at the $25 strike less the premium. But I got a pretty good return on the option. I sold the $25 July 20 2012 put for $0.53 less commission on June 11. Since it is expiring today I received a total of $45.01 in premium on the $2,500 over 39 days. That works out to a 1.80% return which when annualized is a 18.19% return. Not too bad. Even after taxes this will work out to a 1.30% return annualized to 12.82%.

As I said earlier it's a little bittersweet. I did get a good return but honestly I would have preferred that Intel be trading at $24.99 today and the option be exercised allowing me to a get a entry price of around $24.63. This would have increased my stake in Intel at a price that is at a discount to it's fair value, as a I calculated it, by about 19%.

Now I have to figure out what to do with the extra $2,500 in cash that is freed up. I might be looking at other put options to sell on Intel because I would like to add to my position but if the price isn't right then that'll be a no go.

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