On June 4th, 2019, I made the following put sell - PPEI Oct 18'19 5 Put @0.25
This is already the twenty-first (#21) put sell from my short options trader career. For now, it seems I've found my way in options trading - I'm selling puts against (high) dividend paying stocks I already own or I would like to have.
PEI is a stock we have in our child portfolio.
Dividends are paid quarterly in the following months - Mar, Jun, Sept, and Dec. In case I will be assigned PEI stock before options expiry I will have 100 shares paying me dividends and giving a nice boost in those months. Awesome.
Got for this trade a premium of $25, but I will be obligated to buy 100 shares of PEI if the price will drop below $5 USD per share by Oct 18, 2019.
Break-even price: $4.75
This latest trade gives 12.13% yield annually
In case I will be obligated to buy this stock, I already have collected premium, and my real buying price will be $4.75 or just $4.75 for 100 shares of PEI with an annualized dividend at $0.84 that's a very high 17.68% dividend yield.