On, 7/23/12, I sold 1 CHK Aug12, $15 Put in my Taxable Account for a net deposit of $34.24. My basis for these CHK shares, if put to me, would be about $14.22. This transaction represents simple returns of about 2.40%/ and an annualized return of about 33.74%/ on my potential basis with 26 days to option expiration.
These are the latest iterations of selling Puts on CHK in this account. With CHK continuing to go up I decided to sell the $15 strike again. CHK has continued to move up so I am still comfortable selling the $15 strike.
I would have preferred to sell the weekly Put but the premium is just not worth it. Even the $15 weekly strike is not worth it. Even so, the $15 Put has a pretty good return, especially if it expires worthless. If assigned, I will begin to sell Covered Calls and perhaps, try to own the stock for a considerable length of time and collect some dividends in this account.
CHK pays a .0875 quarterly dividend for about a 1.90% annualized return at the current price. Add the option premiums available to the dividends and there is a pretty good annual return on the investment.
S&P continues a 12-month price target of $20 and a Hold recommendation on CHK. MarketEdge continues a price opinion of $18.60 and a Long recommendation. The 27 Yahoo Analysts have a mean 12-month price target of $23.08 and a recommendation of 2.4 where 1.0 is a Strong Buy and 5.0 is a Strong Sell.