Writing Puts All Day Long

Writing Puts was the order of the day. Today’s market action following yesterday’s late afternoon drop, just lent itself to writing puts. The VIX headed higher reaching 43.87 by the afternoon as selling intensified. Then a late day rally capped the loss, but overall there were lots of bargains in writing puts. Here are some of the puts I wrote today:

WRITING PUTS – THE STOCKS:

YUM STOCK : I have been trying for a few days to sell puts against YUM Stock at lower put strikes but the premiums just did not warrant the risk of assignment. Today was a very different story. I ending up writing puts at the 22OCT11 $47 and $45 strikes. The $45 put I sold for .62 and the $47 for $.95. Review Yum stock trades for 2011

JOHNSON AND JOHNSON STOCK: As some readers may recall from my market direction post from yesterday, I have been waiting patiently for Johnson and Johnson stock to fall making writing puts at the lower strikes a lot more profitable.  Today I was writing puts at the Nov $57.50 for $1.37.  As readers might remember, I believe JNJ Stock is attractive in the mid-50’s range and if you go to the market direction post from yesterday you can see my chart on JNJ Stock. Review JNJ stock trades for 2011

VISA STOCK: Visa stock has been a wonderful stock for writing puts against. Last month my far out of the money $67.50 puts expired and today I sold the 22OCT11 $70 put for .72 cents. After commissions this works out to 1% for the month and stays far enough out of the money that I think the chance of assignment is low. Review VISA stock trades for 2011

PEPSICO STOCK: The stock has pulled back from its recent run up and today as it fell towards $60.00 I was writing puts at the 22OCT11 $55.00 strike for .56. Review PepsiCo stock trades for 2011

NUCOR CORP: As some readers may recall, I was assigned shares in August and sold Jan covered calls against those shares. Meanwhile my September puts expired and today I was writing puts for 22OCT11 at $25 for .31 cents.  Review Nucor stock trades for 2011

MICROSOFT CORP: Microsoft stock fell to 24.60 today and I was aiming for .25 cents for the Oct $20 strike. That would be an 18% protection level, but I couldn’t get .25 cents. Perhaps later in October. Review Microsoft stock trades for 2011

MERCK AND COMPANY INC: The stock fell more than 2.5% today but I am continuing to hold my October $29 puts. Should the stock fall lower, I will buy back and roll lower into November or if this is not possible for a credit, I will roll further out and down. There must be a credit if I have to roll lower. Review Merck stock trades for 2011

MCDONALDS CORPORATION: I put in offered to write puts for 22OCT11 at the $75 strike but I wanted .65 cents. This just didn’t happen. Believe it or not I still think MCDONALDS is overvalued at even today’s low of $85.10.  At $75.00 the $2.44 dividend is worth 3.25%. With that kind of dividend on McDonalds, I would be interested in the stock, but not at $85.00. If the selling gets high enough I am sure I will be able to sell puts at the $75.00 level for the premiums I want. Review McDonalds stock trades for 2011

KRAFT FOODS: Nothing new to report on Kraft as I am continuing to hold my Oct $32 puts but IU won’t be surprised if the stock falls below $32.00 by options expiry. If that happens I will buy them back and be writing puts further out and lower. Review Kraft stock trades for 2011

INTEL CORPORATION: The stock remains strong. Back on Sept 6 I was writing puts for Oct at the $16 strike. I am still holding those puts but even with all the selling in the past two days, Intel stock is no where near the $19.55 price it was at on Sept 6. Review Intel stock trades for 2011

EXXON MOBIL CORP: As the US dollar rises so falls oil and commodities. Exxon Mobil is no different and the stock fell over 4% at one point today. I am still holding my Oct $60 and Oct $55 puts that I sold. I added nothing new today as the oil companies might move lower. Review Exxon stock trades for 2011

COCA COLA: I have been waiting to write puts for October as I felt the stock was too high as it sat above $70.00. Between yesterday and today the stock has pulled back dramatically and fell to $66.62 today. I was busy writing the Oct $62 put for .88 cents. Review Coca Cola stock trades for 2011

CLOROX STOCK: Another perennial favorite has been Clorox stock. It has been a winner for the past 3 years. My September naked puts expired and today I was writing puts for the 22OCT $60 strike at .70 cents. Review Clorox stock trades for 2011

AT&T STOCK: The stock fell over 2% during the day and closed down 1.94% to $27.75. I am still holding my Oct $26 naked puts and I will roll them if the stock should fall this low by October options expiry. Review AT&T stock trades for 2011

MY USA STOCK PORTFOLIO TO DATE

After today’s activities my USA Stock Portfolio looks like this:

Earnings To Date: $128,338.50

Total Capital invested: $605,184.50

Earnings to Date are $128,338.50

Total Capital Committed:  609,460.00

Margin In Use: 0.00

Total Return For 2011: 21.05%

WRITING PUTS SUMMARY

So far so good for the year. My goal was 12% for the year. With 21% earned to date I can keep writing puts at lower strikes without worrying about making 1% a month.

Of my earnings to date $58044 of it is from my spy put hedge. That means the rest of my portfolio which is primarily writing puts, has earned $70,294.50. This means that my writing puts strategy has earned 11.5% to date. You can see the value of the SPY Put hedge, but even without it, my writing puts this year will probably earn better than 12%.

>>TO PUT SELLING STRATEGIES INDEX

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