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 August 22, 2019, I made the following out of the money (OTM) put sell - PEI APR 17'20 3 @0.3
This was already the sixty-second (#62) 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's stock portfolio.
PEI currently is trading at $5.41 and has a yearly dividend payout of $0.84 giving a yield of 15.52%. 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 $30, but I will be obligated to buy 100 shares of PEI if the price will drop below 3 USD per share by APR 17 2020
Break-even price: $2.7
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 $2.7 or just $270 for 100 shares of PEI with an annualized dividend at $0.84 that's a very high 31.11% dividend yield.