fuzzballl 6:50 am on Wednesday, October 24, 2018
Tags: IRA ( 431 ), ShortPuts ( 4,763 ), YieldHogs ( 2 )

T

#ShortPuts #IRA – It is giving a chance to get back in. Good divvy down here so selling at the money.

Sold T JAN 18 2019 31.0 Puts @ 1.30

Jeff 7:01 am on Wednesday, October 24, 2018

Not the kind of move I make often, but I like your point: good divvy for a cheap stock.

Sold $T Jan 2019 31 puts for 1.37. #ShortPuts #YieldHogs
fuzzballl 7:02 am on Wednesday, October 24, 2018

Just some quick number crunching comparing buy and hold for divvy collection vs put selling and more active trading and my thoughts on these kind of trades (feel free to add!)….

Second time into these Jan 2019 puts. This particular position will give a divvy yield of 6.7% or 18.5% annualized returns on just the put sale if it’s never exercised. Two trips into this ticker in last few months has brought in over 3 years of divvys.

Downside will be no capital appreciation but cash reamains in the account to draw a little interest on top of all this.

To sum it up…doesn’t matter to me what happens to the stock. That’s a great feeling. Covered calls would probably boost the “divvy” yield to well north of 10 percent selling conservatively.
- fuzzballl 7:12 am on Wednesday, October 24, 2018
  
  BTW…here’s how I calculate annualized returns on a particular put sale position (assuming no assignment). All you numbers guys out there check my work and see if I’m doing this correctly.
  
  31 strike received 1.30 of premium so position uses $2970 of buying power.
  
  130 divided by 2970 = 4.37 percent return on just the raw sale.
  
  With 86 days to go this trade could be done 4.24 times per year:
  
  365 divided by 86 = 4.24
  
  If the exact trade were done 4.24 times per year the return would be 18.52%
  
  4.24 times 4.37% = 18.52%
  - Jeff 7:16 am on Wednesday, October 24, 2018
    
    I should make this a Menu item: How to Calculate annual return on put sales.
    - fuzzballl 7:20 am on Wednesday, October 24, 2018
      
      Does that look right?
  - john4419 7:21 am on Wednesday, October 24, 2018
    
    Is this assuming you are not assigned?
    - fuzzballl 7:23 am on Wednesday, October 24, 2018
      
      Yes. If assigned then writing quarterly covered calls to boost the returns while waiting for the divvy payments would be the new plan.
    - fuzzballl 7:23 am on Wednesday, October 24, 2018
      
      Thanks John. Clarified it above.
fuzzballl 7:31 am on Wednesday, October 24, 2018

5K AT&T Nov 29.5 – 32 put spreads trade 97c (TheFlyOnTheWall)
THE FLY 9:30 AM ET 10/24/2018
5K AT&T Nov 29.5 – 32 put spreads trade 97c. The stock down $2.06 to $30.96 after earnings and the spread likely rolls long puts opened ahead of the profit report because 5K Nov 32 puts opened for 55c Tuesday. If so, those are being covered today at $1.22 – for a quick $335K profit on a 5K lot. Rolling to Nov 29.5 puts expresses concerns about further losses in the stock over the next few weeks.

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