Clorox Stock Down Over 1% On Release Of 2013 Annual Report Is A Put Selling Profit Chance

Clorox Stock is down over one percent at noon on Oct 4 2013 and appears not yet ready to bounce back. The selling comes on the back of the company releasing its 2013 Annual Report which is titled, “Powerful. Purposeful. Proven.”Clorox Stock Annual Report for 2013The report does not seem to be soothing investor concerns over the ongoing restructuring at the company despite comments from Clorox Chairman and CEO Don Knauss who explained: “This year’s report is unique in that it spotlights our accomplishments during our Centennial Strategy period and previews our goals and strategic priorities for 2020. As we look forward to our next set of milestones, we’re leveraging the power of our brands, building on proven results and focused on a purposeful strategy. All the while, we’re remaining grounded in our strong principles of corporate responsibility.”

Clorox has set up a portion of their site here with various information articles and multimedia presentations. Their report focuses on what management sees as key area which include such areas as Greenhouse gas emissions and energy consumption, having products with sustainability improvements, having their employees engaged more with the company and its products along with a focus on safety.

Clorox Stock Outlook

So how will all this continue to impact the outlook for Clorox Stock? The most recent large investor who had tried to make changes at Clorox was Carl Icahn in the summer of 2011. His primary goal seemed to be to improve share holder value by selling the company. That didn’t happen and it seems to no longer be even mentioned. Whether Icahn has Clorox Stock shares or is out is not entirely known but I am assuming he is. Meanwhile though he managed to push the share values to $75 that summer and there is a lot of support at that level now in the stock.

Clorox Stock 12 Month Chart

If we look at the past 12 months in Clorox Stock you can see that based on volume there is still a lot of interest at the $75 level in the stock. Based on present earnings $75 is good value for the stock. The stock ran up to $90 this last spring (2013) and while a number of investors are in the stock at that level most of them will be wanting to get out by now so there really is no support for the stock at that level. If you look at the chart you can see some dip buying in the first sell-off that pushed the stock down to around $83.50 but again there is no support at $83.50. This past summer there was heavy buying at the $85 to $86 level which will have built up some support but again it is light. At present the stock is starting to build support around $82.50.

Clorox stock one year chart

Two Support Levels

There are only two support levels at present in the stock that have any strength. The first is lighter support at $82.50 and the other is stronger support at $75. The $75 level has very good support.

Conservative Put Selling For Small Income

For investors who are looking for small gains to their portfolio or perhaps want to augment their portfolio and apply some margin use but do not want to ever have to use that margin, the strike for Put Selling is $75.

Put Selling this strike two months out each time the stock dips returns about half a percent to three quarters of a percent. The margin or capital is tied up for just two months and can be closed earlier perhaps for 5 cents usually two weeks prior to the options expiring. This allows an investor to then take advantage of the next dip and sell again for often slightly better than half a percent. The annual return from this type of very conservative Put Selling is between 3.9% to 6% dependent on the put income earned at the time of trading. $75 has enough support that should the stock fall back I would be able to easily roll down to $72.50 and move farther out in time to keep any such roll down profitable. Clorox Stock is not going to disappear and makes for a reasonably safe trade for this type of Put Selling strategy.

Regular Put Selling For Good Income

For good income I like the $80 put strike. Put Selling the $80 put strike continues to generate about 1% a month or an easy 12% a year. If the $80 put strike was reached by the stock falling lower I would immediately roll down and out to $77.50. The stock moves slow enough that any move lower can easily be rolled down against. This stock does not fall 10% in a day.

Clorox Stock Advantage For Put Selling

The biggest advantage Clorox Stock brings to investors is the stability of the stock itself. While like any stock risk is always present, Clorox Stock is slow-moving enough that it affords investors an opportunity to sell puts and then glance at it daily and when the chance is there close the trade and lock in the profit.

This has been the strategy I have used for a long time in Clorox Stock. I can be very patient with Clorox Stock and not rush into Put Selling until I see that dip in the stock. With large institutional investors holding a lot of the shares the stock trading is usually pretty tight and most drops have been seen as buying opportunities by investors with much deeper pockets such as pension funds and the like.

Share Assignment – No Worries

If assigned shares, the dividend is safe which means selling at the money or in the money covered calls 4 to 6 months out should earn the dividend and provide a means to get the stock called away, sometimes early. Conservatively this stock can generate 10 to 12 percent a year in my portfolio. When I throw in the odd stock trade a few times a year when the stock is extremely oversold, I can usually boost that return to 15% to 18%. This year so far the stock has returned over 16% solely through Put Selling without any stock trades. I think Clorox Stock is well worth a look.

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