The Money Tree

Safely Generating Income in Retirement

New NP Trade – ABT

Posted by mounddweller on January 14, 2011

Fellow Traders,

I made another naked put trade today.  Like the naked put trades I made earlier this week this trade was made in a stock that I’ve successfully traded before.  In this case it is Abbott Labs (ABT).  I sold 2 FEB $46 puts at $0.60.   ABT has been falling for several days now and it appears it may have further to fall.  Thus, I limited my trade to only 2 contracts.  My plan is to sell additional contracts if it continues to fall.  Looking at the chart I think it has strong support at $46. 

ABT is a stock that I wouldn’t mind owning in this price range.  It has a strong history of growth in earnings and in raising its dividend annually.

My ROIC is 1.19% with a holding period of around 35 days to expiration.  Not great but not bad either given the blue-chip status of the underlying company, Abbott Labs.

Regards,

Troy

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2 Responses to “New NP Trade – ABT”

  1. dealmakr said

    Hi Troy,

    I like ABT from a long term trading perspective. Good dividend, but way overleveaged balance sheet that I would like to see some improvement on. Earnings next week.

    Here are some Positions that I have updated;

    Updated Position KLIC 01/22/11

    09/21/10 Bot 5000 KLIC 6*
    09/21/10 Sold 50 Oct 6 Call .35
    09/21/10 Sold 25 Oct 6 Put .40
    09/22/10 Bot 2500 KLIC 5.77*
    09/22/10 Sold 25 Oct 6 Put .40
    09/22/10 Sold 50 Oct 5 Put .10
    09/22/10 Sold 50 Nov 5 Put .20
    09/22/10 Sold 25 Nov 7 Call .20
    10/08/10 Bot 2500 KLIC 5.80*
    10/08/10 Bot 2500 KLIC 5.92*
    10/08/10 Sold 50 Nov 6 Call avg .40
    10/08/10 Sold 50 Nov 7 Call .15
    10/08/10 Sold 25 Nov 5 Put .20
    10/11/10 Bot 2500 KLIC 5.80*
    10/11/10 Sold 25 Nov 6 Call .40
    10/14/10 Sold 25 Nov 6 Call .40
    10/15/10 Bot 5000 KLIC 6.15*
    10/15/10 Sold 25 Nov 6 Put .50
    10/27/10 Bot 2500 KLIC 6.15*
    10/27/10 Sold 25 KLIC Dec 6 Put .45
    10/27/10 Sold 25 Dec 6 Call .60
    11/11/10 Sold 50 Dec 6 Call .45
    11/18/10 Sold 25 Dec 6 Call .30
    11/18/10 Sold 25 Jan 5 Put .20
    11/18/19 Sold 50 Jan 6 Call .50
    11/18/10 Bot 2500 KLIC 5.99*

    Closed Trades Profit/Loss

    10/15/10 Bot Close 25 Nov 7 Call .25 09/22 sale (125)
    10/15/10 Expired 50 Oct 5 Put 500
    10/15/10 Expired 50 Oct 6 Put 2000
    10/15/10 Exercised 50 Oct 6 Call 1750
    10/15/10 Sold Exercise 5000 KLIC 6 (09/21 buy) 0
    11/05/10 Bot Close 25 Nov 6 Put .10 1000
    11/05/10 Bot Close 25 Dec 6 Put .30 375
    11/11/10 Bot Close 50 Nov 7 call .05 500
    11/19/10 Bot close 50 Nov 6 Call .20 1000
    11/20/10 Expired 75 Nov 5 Put 1500
    11/20/10 Exercised 50 Nov 6 Call 2000
    11/20/10 Sold exercise 5000 KLIC 6 (9/22&10/08 buy) 1125
    11/26/10 Bot Close 100 Dec 6 Call .84 (3900)correct month
    11/26/10 Sold 10000 KLIC 6.69 6850
    01/22/11 Expired 25 Jan 5 put 500
    01/22/11 Exercised 50 Jan 6 Call 2500
    01/22/11 Sold 5000 KLIC 6 (350)

    Total return P/L on closed trades 17225

    Position Closed

    This is an example of a stock that acted like the Energizer Bunny and kept going and going from 6 to 9. Sometimes thats the way it works out doing CC’s you miss a meaty move, but thats all part of the game, just have to look for more participants or a replay at a later date.

    Good Trading

    dealmakr

    Updated position BRCD 01/22/11

    11/24/10 Sold 50 Dec 5 put .13*
    12/01/10 Bot 5000 BRCD 5.02*
    12/01/10 Bot 5000 BRCD 5.01*
    12/01/10 Sold 100 Dec 5 Call .18*
    12/01/10 Sold 100 Dec 5 Put .16*
    12/02/10 Sold 50 Apr 5 Put .50
    12/03/10 Sold 100 Jan 5 Put avg .225*
    12/07/10 Sold 50 Jan 5 Put .18*
    12/17/10 Sold 50 Jan 5 Put .19*
    12/17/10 Sold 50 Apr 5 Put .50
    12/30/10 Sold 20 Apr 5 Put .50
    12/30/10 Sold 20 Apr 7 Call .27*
    01/03/11 Sold 100 Feb 5 Put avg .245
    01/03/11 Sold 50 Feb 6 Call .27*
    01/03/11 Bot 5000 BRCD 5.36
    01/04/11 Sold 30 Feb 6 Call .30*
    01/04/11 Sold 50 Jul 5 Put .53
    01/04/11 Bot 5000 BRCD 5.54
    01/13/11 Sold 100 Jan 6 Call .12*

    Closed trades Profit/Loss

    12/18/10 Exercised 100 Dec 5 Call 1800
    12/18/10 Sold Exercise 10000 BRCD 5 (150)
    12/18/10 Expired 150 Dec 5 Put 2250
    01/13/11 Bot Close 80 Feb 6 Call .35 (550)
    01/13/11 Bot Close 20 Apr 7 Call .28 (20)
    01/22/11 Expired 200 Jan 5 Put 4100
    01/22/11 Expired 100 Jan 6 Call 1200

    Total Return P/L on closed trades 8630

    Total Position Cost/Premium received

    Long 10000 BRCD (54500) avg 5.45
    Short 100 Feb 5 Put 2450
    Short 120 Apr 5 Put 6000 (corrected)
    Short 50 Jul 5 Put 2650

    Net Position Exposure

    Naked Puts 27000 shares

    Got the bingo for the Jan 5 Puts and Jan 6 Calls. The market itself isn’t acting well with many stocks selling down after reporting decent earnings and if the earnings wiffed, selling down quite a bit ala CREE,FFIV etc. With BRCD reporting on 02/21 and the Feb options expiring on 02/19, I will be setting a stop on the long position at 5.60 unless more premium can be written on the Feb 6 calls than the .18 currently available to capture a better risk/reward scenario. Still a lot of chatter about a takeout and want to have some exposure to this company, but stock can be bot at any time and would rather buy into strength than weakness when call premiums are better.

    Good Trading

    dealmakr

    Updated position XRX 01/21/11

    11/30/10 Sold 50 Dec 11 Put .16*
    11/30/10 Sold 30 Dec 11 Put .15*
    12/06/10 Bot 3000 XRX 11.74
    12/06/10 Sold 30 Apr 12 Call .82*
    12/31/10 Sold 25 Jul 9 Put .30
    01/21/11 Sold 30 Feb 12 Call .12

    Closed Trades Profit/Loss

    12/18/10 Expired 80 XRX Dec 11 Put 1250
    12/29/10 Dividend .043 on 3000 shares 129
    01/21/11 Bot close 30 Apr 12 Call .28 1620

    Total Return P/L on closed trades 2999

    Long 3000 XRX 11.74 (35220)

    Short 30 Feb 12 Call 360
    Short 25 Jul 9 Put 750

    Net Position Exposure

    Covered Calls 3000 shares
    Naked Puts 2500 shares

    XRX selling down like a lot of others and decided to bring CC exposure down a few months. With earnings out next week, will watch to see how stock reacts before adding more to position.

    Good Trading

    dealmakr

  2. mounddweller said

    dealmakr,

    Good to hear from you! It’s been awhile. It appears you’ve been very busy trading. Appreciate your comments regarding ABT.

    Regards,
    Troy

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