Yum stock March options expiry saw the stock close at $50.50. The Ultimate Oscillator reading which earlier told me to sell my purchased shares was correct. Sometimes the technical tools work out and the trade is a winner.
The decision now is what put strike I should write puts at, keeping in mind that just a month ago Yum stock was having some trouble. If I sell puts in Yum stock too high I could be assigned shares, which would be harmful to my overall strategy of earning income without being assigned shares for some time yet.
YUM STOCK – The Latest Chart:
I turned to the Ultimate Oscillator again. This time, the ultimate oscillator shows that Yum Stock is completely neutral. The chart below shows the action in yum stock since mid-February. The neutral reading is actually a good thing for my strategy as it tells me that the likelihood of the stock falling is not very great, just as the opposite is also true.
It will probably take better earnings for the stock to rise from here but I believe the downside is limited at this stage. I therefore decided to write puts at the May 48 strike for .80 cents.
YUM STOCK – Summary Of March 23 2011 Trade:
The purpose of my continuing to write my comment and show various charts on my trades is to get readers thinking about other methods or strategies for investing. Without goals it would be impossible to consistently earn profits while minimizing risk in any trade let alone Yum Stock.
I have now used the ultimate oscillator three times with a large degree of success. While no technical tool is perfect, it is through carefully understanding the stock being traded as well as learning to have confidence in the signals the technical tools are generating that lead to successful investing. Yum stock has continued to do well for two years and the likelihood of this changing, based on Yum stock historic charts, is actually low for my style of trading. By staying out of the money when writing puts, I have been able to garner significant income in Yum stock and I do not expect this to change in the short to mid-term time period.
View YUM Stock google chart.