amf...would a "real" msft put sale be acceptable, instead of jdsu?
3/1 msft common at 92.5. sell 30 april 95 puts at 8, total 24000 premium. if stock at or below 95 at april expiration i either accept assignment at 95, with adjusted cost basis of 87, buy back the contract, still with a profit above 87, or resell the same strike with a farther out expiration. committed to possible assignment of 285000 msft, 24000 premium gives return against capacity of 8%. risk? owning msft at 87....would you buy at that price?
as far as opportunity loss, it doesn't enter into the picture, as it is a use of cash or margin capacity to generate income. my long portfolio contains ample shares of msft,intc,emc....etc. so why borrow margin to "buy", use capacity to "sell"......it's laying dormant, maximize it |
