On Thursday, 10/22/09, I STO 2 MO Nov09 18 Puts for a net deposit of $34.49 in my taxable account.  If put to me my basis in these MO shares would be 17.83.

I should have written about this transaction earlier but I guess time got away from me.  In any case, I have been looking at various stocks to sell Puts on that I wouldn’t mind owning if they were assigned to me.  MO is a stock that I already own in an IRA account and would like to own more.  It pays a nice dividend which it recently raised to .34 from .32 per shares.  That equates to about 7.5% annualized at the current market price of 8.01 as I write this.  I take a cue from Jim Crammer in that he regularly says that he owns MO in his charitable fund, believing that the dividend is safe and that there is no reason for MO to be so low.

I should note that MO is currently down with the rest of the market.  MO was as low as about 13.50 last December.  Do I think it will fall that far again?  No, not really but anything is possible.  Do I think the dividend will be sustained?  Yes, it probably will.  Sales year over year are up as are earnings per share.  Earnings are above the dividend payout at about 125% of dividend based upon the quarter ending Sep09.  Those are some of the reasons that I would not mind owning MO if the Nov09 Puts are assigned to me.  I would hold the stock and sell Covered Calls on it while collecting the dividends.