#27 Options trade: PEI OCT 18'19 6 Put @0.5

Updated: 23 December, 2019 seen 17

On June 7th, 2019, I made the following put sell - PEI OCT 18'19 6 Put @0.5

This was already the twenty-seventh (#27) 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. 

PEI currently is trading at $6.38 and has a yearly dividend payout of $0.84  giving a yield of 13.16%. 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 $50, but I will be obligated to buy 100 shares of PEI if the price will drop below $6 USD per share by Oct 18, 2019. 

Break-even price: $5.5

This trade gives 21.77% yield annually

In case I will be obligated to buy this stock, I already have collected premium, and my real buying price will be $5.5 or just $550 for 100 shares of PEI with an annualized dividend at $0.84  that's a very high 15.27% dividend yield.