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Strategies & Market Trends : Option Strategies

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To: Cliff0rd who wrote (1769)	9/1/2016 3:01:34 PM
From: robert b furman	1 Recommendation Recommended By Jim P. Read Replies (1) of 2591

OK guys, Here is a trade I just put on. Sold puts on CLDT Chatham Lodging Trust. They specialize in the high end of longer stay hotels (mostly for people with contract work or trying to relocate) all located in metropolitan locations. There is a Summerfield by Hyatt in my Houston town of The Woodlands very nice and new. Their last q they disappointed as they were not able to increase their average room rate - they already are very high compared to competitive hotels (with in their extended stay niche) in a high average room rate apparently their customers prefer and look for them as they travel around the country. Current chart after they disappointed - down from $31.00 - trading now at 20.20 next earnings is 11/03/16. screencast.com I have sold 15 feb 17 2017 puts for 1.30. Net purchase price is 18.70. Dividend is paid monthly 11 cents = 1.32 annually yielding 7.06 % The 52 week low was 15.96 on January 11 this year when it paid 8 cents special dividend was paid a 10 cent dividend was paid in dec and January) so that year the dividend was 1.28 monthly that was a 8.02% yield. screencast.com The annualized premium was 1.30 / 18.70 = 6.95% for 5 months or 16.67% annually. I've watched this reit for over a year now and had hoped to buy after an earnings miss. So I got one and this will be my first position. I would love to get this premium on the 17.50's and will keep some powder dry for that if it should drop further but it has dipped 35 percent already. 1.30 on a 17.50 put lands me very close to the 15.96 annual low 16.20. Their debt to capital is low vs. peers 46.46 vs 47.65 Long term 6 year chart: screencast.com Welcome any negatives from your own DD as this is my first position. I like the 7% dividend yield - they are getting hard to find. Thinking 16 would be a steal and 18.70 is 2 years of dividends away. I have a comfort zone of owning a stock underwater as long as the annual dividend = the draw down. But that's just me. Bob

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