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Strategies & Market Trends : Option Strategies -- Ignore unavailable to you. Want to Upgrade?

To: sm1th who wrote (2068)	5/22/2019 7:54:14 PM
From: robert b furman	1 Recommendation Recommended By Debt Free Read Replies (2) \| Respond to of 2591

Hi Sm1th. I like longer time premiums and going out longer. I know they yield less, but if I get assigned - I love the better dividend yield. The three year low is $48.56. Today the January 2020 $50.00's were bid /ask @ $1.46 / $1.51 - Say you sold the put at $1.50 and an assigned net purchase price of 48.50. January is 8 months out. $1.50 / $48.50 = 3.09% / .67 (8 months out) = 4.62%. annualized The dividend is .62 x4 = $2.48 / 48.50 = a yield of 5.11 %. This set up is how I like to lever the equity in my portfolio. The 5.11% yield gets me over my threshold on return I require (5%)$ If I'm lucky enough to get it assigned to me. If not assigned, the equity in my portfolio picks up 4.62% while my cash balance grows by 1500 per contract. My pain threshold makes buying Qcom at $48.50 with an annual dividend of $2.48 very easy to hold for a long term buy and hold. My mental justification of holding a stock under water is net purchase price minus the annual dividend.48.50 - 2.48 = 46.02 and I'm sleeping fine. I'll gladly accept 4.62% or $1500 cash per contract and really hope to get the stock assigned. It will most likely take some good luck to get it assigned. Some where around 5% yield on the dividend, dividend mutual funds start giving price support with buying pressure. That's the kind of comfortable dividend growth portfolio I'm very comfortable with. My hunch would be you'll get stuck keeping the money. When I think that way, I often sell an equal number of puts with a bit higher strike price, with a better chance of getting them assigned. If the total trade worked out perfectly I'd get the higher strike assigned and I'd use the cash from the 3 year low strike price to help pay for the higher strike price. Thanks for pointing that out - it's a very good trade I think. I'm of the opinion that QCOM is the best radio to use in the new soon to be ramping 5G smartphones. Intel gave up! With Macd and Rsi collapsing, I'll wait a bit and see if they flatline on the lower line. Hopefully the put premium annualized will get into the 7 % range and it is a no brainer to do in a bigger size of contracts. It's just me , but Qcom yielding 5% on its dividend is a very exciting proposition. I'm a scardy cat trader and always look at the 3 year low and then the 5 year low. Thanks for pointing it out Sm1th - great trade and eye!! Bob