Stocks and Options » Put

Chesapeake Energy Corp (CHK) – Sold May 25, 2012 Weekly Put

Bill — Mon, 21 May 2012 21:01:53 +0000

Today, 5/21/12, I sold 1 CHK May 25, 2012, $14 Weekly Put for a net deposit of $9.24 in an IRA account. My basis for these CHK shares, if put to me, would be about $13.96. This transaction represents a simple return of about .66% and an annualized return of about 55.46% on my potential basis with 4 days to option expiration.

This is the second time that I have sold the $14 Put on CHK in this account. I am considering this the second of a potential series of trades and as such, I accumulate the option premium from each trade to reduce my potential basis.

I would have preferred to sell the $15 Put but just do not have enough available cash in this account to cover that. Even so, the $14 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.

CHK pays a .0875 quarterly dividend for about a 2.35% 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 if it is assigned to me. On the other hand, I can certainly roll out the Put later this week if it appears that the price may pull back more than I am willing to accept in order to reduce my potential future basis.

S&P continues a 12-month price target of $20 and a Hold recommendation. MarketEdge continues a price opinion of $19.95 and an Avoid recommendation. The 28 Yahoo Analysts have a mean 12-month price target of $23.04, down slightly from $23.88 last week, and a recommendation of 2.4 where 1.0 is a Strong Buy and 5.0 is a Strong Sell.

Chesapeake Energy Corp (CHK) – Sold May12 Put

Bill — Mon, 14 May 2012 18:13:36 +0000

Today, 5/14/12, I sold 1 CHK May12 $14 Put for a net deposit of $15.24 in an IRA account. My basis for these CHK shares, if put to me, would be about $14.05. This transaction represents a simple return of about 1.08% and an annualized return of about 78.96% on my potential basis with 5 day to option expiration.

I have thought about CHK off and on for quite some time. I finally decided that the stock has fallen enough and the rebound today convinced me to do a trade. I would have preferred to sell the May12 $15 Put but just do not have enough available cash in this account to cover that. Even so, the $14 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.

CHK pays a .0875 quarterly dividend for about a 2.24% 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 if it is assigned to me. On the other hand, I can certainly roll out the Put later this week if it appears that the price may pull back more than I am willing to accept in order to reduce my potential future basis.

S&P currently has a 12-month price target of $20 and a Hold recommendation. MarketEdge has a price opinion of $19.95 and an Avoid recommendation. The 28 Yahoo Analysts have a mean 12-month price target of $23.88 and a recommendation of 2.4 where 1.0 is a Strong Buy and 5.0 is a Strong Sell.

Hewlett-Packard Company (HPQ) – Sold Aug12 Put

Bill — Thu, 10 May 2012 16:55:24 +0000

Today, 5/10/12, I sold 1 HPQ Aug12 $23 Put for a net deposit of $127.24 in an IRA Account. My potential basis for these HPQ shares is about $21.93. This transaction represents a simple return of about 5.80% and an annualized return of about 20.56% on my potential basis with 103 days to expiration.

I was able to add $2000 to this Roth IRA account today and started casting about for a way to use it. After considering several options, I finally decided to sell this HPQ Put. I already have an outstanding HPQ Aug12 $29 Covered Calls in this account with a basis of $27.85. If I am assigned this Put in August I will combine them with the ones I already own to reduce my basis. Two other possibilities are – my Put and my Call will expire worthless or HPQ will rise enough for my shares to be called away and my Put will still expire worthless. Of course, either of the contracts could be exercised early but I believe that is a less likely situation.

As a reminder, I originally initiated trades on HPQ as one of my trades to generate cash a little faster. That tactic has not worked out so well for me with HPQ. I have been able to collect some dividends though while I wait.

Speaking of dividends, HPQ pays a small divided at twelve cents per quarter, which is a yield of about 2.05% at its current price of 23.47 at this writing. I have been able to collect dividends once since acquiring HPQ back in February for a total of $132.00 with a yield on my basis just over 1.7%.

S&P continues a 12-month price target of $29 with a Hold recommendation on HPQ. MarketEdge has a price opinion of $24.51 and a Neutral recommendation. The 21 Yahoo Analysts have a 12-month price target of $39.81 and a recommendation of 2.7 on a scale where 1.0 is a Strong Buy and 5.0 is a Strong Sell.

Alpha Natural Resources Inc (ANR) – Rolled Out and Down Weekly Put

Bill — Thu, 03 May 2012 17:24:52 +0000

Today, 5/3/12, I BTC 1 ANR May 4, 2012, $16 weekly Put and sold 1 ANR Jun12 $15 Put for a net deposit of $12.49 in an IRA account. This transaction represents a simple return of about .85% and an annualized return of about 7.28% with 42 days left to expiration. My basis for these ANR shares would now be about $14.71 if assigned.

I had originally thought I would let these share be assigned tomorrow. However, the price has fallen so much that I decided to roll this Put out and down one dollar. I would probably have been okay taking the Put assignment and selling Calls at $16 but just felt better at the moment to do the roll.

ANR does not pay a dividend so these ANR shares are most definitely a trade and not an investment. S&P continues a 12-month price target of $19 and a hold recommendation on ANR. MarketEdge continues a price opinion of $16.15 and a Neutral recommendation. The 23 Yahoo brokers covering ANR are more optimistic with a 12-month price target of $23.78 and a recommendation of 2.1 where 1.0 is a Strong Buy and 5.0 is a Strong Sell.

Alpha Natural Resources Inc (ANR) – Sold Weekly Put

Bill — Thu, 26 Apr 2012 16:14:17 +0000

Today, I sold 1 May 4, 2012, weekly Put for a net deposit of $37.24 in an IRA account. This transaction represents a simple return of about 2.30% and an annualized return of about 104.93% with 8 days left to expirations. My basis for these ANR shares would be about $15.83 if assigned.

As I mentioned recently, I have been watching ANR for an opportunity to sell some out of the money weekly Puts in order to put some idle cash to work. I sold some Puts in another IRA account that should expire worthless tomorrow. I had enough idle cash in this account to just sell the one Put contract, so not seeing anything better (I know it’s there but I just did not see it) I decided to make the sale. If assigned, I will look to sell either the weekly or the monthly Covered Call at the $16 or, more likely, the $17 strike price. If these Puts expire worthless I will see if I can sell $16 Puts again for the following week.

ANR does not pay a dividend so these ANR shares are most definitely a trade and not an investment. S&P continues a 12-month price target of $19 and a hold recommendation on ANR. MarketEdge has a price opinion of $16.15 and a Neutral recommendation. The 23 Yahoo brokers covering ANR are more optimistic with a 12-month price target of $23.78 and a recommendation of 2.1 where 1.0 is a Strong Buy and 5.0 is a Strong Sell.