Wednesday, August 15, 2012

Intel Put Option

With Intel closing at $26.27 on Wednesday August 15th, it appears that the $25 August 2012 put option that I sold back in July will expire yet again unless the share price takes a 5% hit between now and end of trading Friday.


Intel Put Options
Put Option Premium Return (%)
$25 July 20 2012 $45.01 1.80%
$25 August 17 2012 $38.01 1.52%



I first sold the July 2012 put option on June 11 which means between that date and expiration of the August 2012 put option this Saturday there were a total of 67 days. When you annualize the premium return, 3.32%, you get an annual return of 18.09%. That’s not too bad considering that’s just money sitting in my account. I really like the idea of selling puts for stocks that you want to get into just at a lower price point. I don’t think I’ll be selling a put option for September’s expiration because the premiums are too low at the $25 strike. Although depending on what the $26 strike premium looks like it might make sense to sell one.

6 comments:

  1. I like your strategy. I too have been selling a lot of puts against companies I want to own anyways. I'm curious what are you paying in commissions? I typically try to collect at least $100 in premium per contract so the fees don't eat so much into my profit.

    ReplyDelete
  2. I'm currently paying $8 in commissions, which is a little high. I don't worry too much about the commission because when I run my calculations to check the profit/loss I usually try to target at least a 1% post commission return. What stocks have you been selling puts on. I can't sell as many puts as I'd like because it takes so much cash.

    ReplyDelete
    Replies
    1. If you click my name and click on the "options" tab you can see all of my options trades for the year. I am close to $2000 in premiums collected especially since my cop puts are expiring. Also using Etrade I only need to keep about 15% of the cost of the shares being assigned in my account. That way I can put my cash to work in other places in the meantime.

      Delete
    2. I'll have to check what Fidelity requires. I might open a option account somewhere else and keep my regular DG/FI account separate. Although it's nice having everything in one place but I know I could save money on commission at other places.

      Delete
  3. I like your strategy too, and seem to go along with austinbroker in trying to collect at least a $100 premium to help offset the commissions. I sold Aug 18 puts for WM and FCX and expect both to expire. In July I was assigned SWY but had INTC, JNJ, PG and WAG all expire. I would also like to see some good premiums come back around for $25 INTC puts.

    ReplyDelete
  4. I would like to get $100 in premiums but for me its all about the price if executed. If I'm not getting the shares at a price I've calculated to be fair value then so be it. A one or two day drop in the market would do wonders for some put premiums.

    ReplyDelete