Mike and thread;
i have only been investing a few years, and have tried my hand at different put selling/covered call techniques, without a great deal of success. i think this is mostly due to my lack of experience and bad timing of my trades, but employing this strategy i have often found that it exposed me to big downside risk while limiting my upside potential.
anyways, i was considering different option plays i could make on CPQ to lower my cost basis from 32 1/2... and i came up with the following interesting idea:
how about selling the jan 20 puts on CPQ for $2? thats a 10% gain in 9 months... if i did this on as many shares as i could buy on margin (i would be willing to be fully margined on CPQ at $18/share!) ... that would be a 20% return in 9 months, or 27% annualized! with CPQ's excellent fundamentals, and the depressed condition of CPQ currenently, and with even the most pessimistic of views putting CPQ's absolute bottom at $15, this seems like an excellent play right now!
you could go for the jan 22's or 24's if you wanted to go for a bigger return, or you could go for the jan 19's or 18's if you wanted even less risk... i seem to recall even some of the shorts on this thread conceeding that their 9-12 month price targets on cpq is 28-32.
any suggestions on this play? does it sound as good a play as it seems to me right now? |
