4 May, 2020 seen 38On April 17th, 2019, I made my first options roll forward and I made the following put sell - PEI JUL 19'19 6 Put @0.8…
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.