No. of Recommendations: 1
Jim or others
Given the bounce in volatility, are you seeing anything attractive in the put selling arena?
No. of Recommendations: 8
are you seeing anything attractive in the put selling arena?
Not as much as you might think.
The ideal candidate is
* a firm you think is worth its current quote or more...
* but the rest of the market thinks is doomed...
* ...so you don't think there is a big likelihood it will rise in price a lot immediately...
* ...and the premiums are good because of the pessimism.
That way you can write puts against it repeatedly for a long time, making a good return even if the stock price is flat.
I dunno, June DG $120 puts bid $13.60?
About 19%/year rate of cash return, or you get an entry price of $106.40.
I think they'll be making around $11 within a year or two, so that would be an entry price at a forward P/E at/under 10.
But of course I'm crazy in thinking they aren't about to go broke.
As with so many things, it only pays to be contrarian if you're right and the rest of the world is wrong.
And if you can do that, you don't really need options to make a living.
Jim
No. of Recommendations: 14
I dunno, June DG $120 puts bid $13.60?
About 19%/year rate of cash return, or you get an entry price of $106.40.
I think they'll be making around $11 within a year or two, so that would be an entry price at a forward P/E at/under 10.
But of course I'm crazy in thinking they aren't about to go broke.
Sign me up to the Crazy Club - eps in the last 4 quarters has been $2.34, $2.97, $2.35 and $2.14, so $9.80 over the last 4 quarters, or, if you annualize their 'terrible' results of the last 2 quarters, $8.98. Is buying back shares. Pays a dividend (although that won't help you with the put). Does well in recessions. Made >$10 eps in each of the previous 3 years. Has doubled revenues and earnings over the last 8 years (9% p.a.) while tripling eps (15% p.a.) because of share repurchases.
Nahh, I think we're better off with Apple at 30 times earnings that plateaued for 10 quarters, no risk there.
DTB
