On July th, 2019, I made the following out of the money (OTM) put sell - PEI JAN 17'20 5 Put @0.4
This is already the thirty-third (#35) 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 $6.52 and has a yearly dividend payout of $0.84 giving a yield of 12.88%. 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 $40, but I will be obligated to buy 100 shares of PEI if the price will drop below 5 USD per share by JAN 17 2020
Break-even price: $4.6
This trade gives 14% yield annually
In case I will be obligated to buy this stock, I already have collected premium, and my real buying price will be $4.6 or just $460 for 100 shares of PEI with an annualized dividend at $0.84 that's a very high 18.26% dividend yield.