On April 11th, 2019, I made the following put sell - PEI MAY 17'19 6 Put @0.25
This is already the sixth (#6) put sell in 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 stands for Pennsylvania Real Estate Investment Trust, I found this stock while doing a search for a high yielding stock to have in my portfolio.
PEI currently is trading at $6.00 and has a yearly dividend payout of $0.84 giving a yield of 14.00%. 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 $6 USD per share by May 17, 2019.
Break-even price: $5,75
Now, this trade actually perfectly fits my budget, as I tend to write puts on stocks costing ~ $6.00 per share, as $600 is the approximate budget on a monthly basis I can afford to spend with ease and no regrets on options trade.
This latest trade gives 38.19 % yield annually
In case I will be obligated to buy this stock, I already have collected premium, and my real buying price will be $5.75 or just $575 for 100 shares of PEI with an annualized dividend at $0.84 that's a very high 14.6% dividend yield.