Put Selling and Naked Calls On Intel Stock Needs A Plan To Work

On Monday I did more Put Selling on Intel Stock and today I sold naked calls. I thought I would write this short article to explain the value of having a plan and the importance of strategy when put selling stocks, particularly during a correction that could turn severe.

Intel stock is under pressure but it is managing to show a lot of support at $26. On Monday I was back put selling and sold 5 naked puts for .39 cents for the 21JUL12 options expiry at $25.00 put strike

This makes a terrific put selling position in Intel Stock as I am now holding 10 naked puts at $24 and 5 naked puts each at $26 and $25 and all are for July options expiry.

But with Intel Stock under pressure and the market direction confirmed down, selling naked calls could be a little icing on the cake.

Put Selling And Naked Calls On Intel Stock

So which way will Intel stock move? Today with the short rise in Intel Stock I sold 5 naked calls for 21JUL12 at $27 for .39 cents. If the stock falls lower my naked calls will expire. If the stock moves higher my naked calls may end up being assigned. This should be an interesting few weeks.

When it comes to put selling I have always enjoyed Intel Stock and I am impressed that the stock has hung on despite the onslaught of selling throughout this correction. By adding naked calls I am enjoying both sides of the movement and whichever way works out doesn’t really matter.

Put Selling and One Year Intel Stock Chart

The one year Intel Stock below shows the best put strikes for selling are $24 and $23 for any investor interested in put selling but adverse to owning shares. Presently there is not enough premium in the July $24 or $23 to make these strikes worth put selling.

As well, even at $25, there is no solid support for Intel Stock. The support for this stock is much lower as it rests around $23.00.

But I am not adverse to owning stock because with 10 naked puts at $24 and 5 at $25 and $26, my break-even on the stock if assigned would be $24.75. If something dramatic happened and the stock fell back to $23.00 I would sell 6 month out covered calls at either $23 or $24 to have the stock exercised.

Intel Stock 1 Year Chart Of Put Selling

The above 1 year Intel Stock chart shows that put selling at $24 and $23 is much safer for those who do not want to be assigned shares

 Intel Stock Put Selling Trade Summary

Meanwhile if Intel Stock cannot climb back to $27, my naked calls end up out of the money adding more profit to my Intel Stock trade. Having a plan and the importance of strategy are obvious in my ongoing put selling trade with Intel Stock. By knowing in advance all the steps I will take no matter which direction Intel Stock moves makes this trade easy to manage and shows the importance of put selling against stocks I would own.

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