Saturday, July 21, 2012

Recent Transaction

Yesterday I sold another put option on Intel. I sold the $25 17 Aug 2012 put for $0.46. Less commission I received a total of $38.01 in premium for a total return of 1.52% which is annualized to 21.75%. I figured that since I want to add to my Intel position but just not quite at today's prices that this would be the best way to go about it. I get paid to wait for the stock price to come down to where I feel comfortable purchasing. Should the put option be exercised my cost basis, after subtracting out the premium received less commission, would be $24.70. With the current $0.90 annual dividend payout that's a yield of 3.64%. As you can see from my stock analysis post on Intel, that is a fair price and sits at a 18.75% discount to my calculated fair value.

Either way this option works out will be fine by me. Of course there's always the chance that the market could take a big dive from here which is honestly one reason I almost didn't sell the option. But the return if it expires and the entry if exercised was a good combination for me to go ahead and sell the put. Should the market take a big dive I just hope that it's enough of a move to get the Intel stock put to me and then low enough to go possibly add another group to my position.

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