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Strategies & Market Trends : Option Strategies

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CusterInvestor

To: robert b furman who wrote (1928)	3/7/2018 6:26:48 PM
From: robert b furman	1 Recommendation Read Replies (1) of 2591

Here's a good play on XOM - the bluest of blue chips in the oil patch. I think energy is bottoming as the generals are finally being taken to the wood shed - its buying times boys and girls! screencast.com XOM's 3 year low ($66.55)was on the week of 8/24/15 - a tough time for the oil patch indeed. At today's close XOM's January 18 2019 puts were bid - ask $3.85 - $4.00. Assuming you could sell these puts tomorrow at the ask $4.00 you would have the following: Net purchase price of $66.00 if put to you! A $3.08 dividend on a net purchase price of $66.00 (below the 3 year low of $66.50) would yield 4.66 %. If you took the $4.00 and kept it as collateral till January 18 2019 you'd tie up your money for 10 months. $4.00/$66.00 (net purchase price) = 6.0606% /.833 yields an annualized return of 7.27%. So if your have option purchasing power in your account, you can add $4,000 to your account (which will hold margin purchasing power till January 18 2019 at no cost to you and get paid a pittance for the cash balance. You either make 7.27% on your collateralized money or you get shares at$ 66.00 (below the 3 year low) and at a dividend yield of 4.67%. Exxon's a rock and I always buy early - but if it keeps dropping until the Macd flat lines (which most stocks do) this story only gets better. There is some room for this to get better as a january 2019 70 put traded today at 2:19:25 @ $4.18. (4.68 dividend yield or 8.8% on your money. No bank does that!!! Thanks again for bringing this to me. Sharp Eyes Grid ! Bob

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