The Money Tree

Safely Generating Income in Retirement

Deep OTM NP Strategy – JUNE Week 1

Posted by mounddweller on June 12, 2011

Fellow Traders,

It’s been a busy week at my house.  My oldest son graduated from high school yesterday.  Thus, the week was filled with preparations for the obligatory ‘open house’ and arrival of out-of-town relatives, some of which are still here.  Thus, my investment analysis and subsequent write-up in this post will be short and to the point.

Here are the trades that met our  selection criteria for this last week before JUNE expiration.

None of these selections peaked my interest.  None are ones I’d be willing to hold should they fall and expire ITM.  Given the current market conditions that is a critical consideration.

Several selections from earlier this month also passed our Week 1 screener.  RIMM is one.  It closed Friday at $36.56.  For the week it was down $2.42 (6.21%).  Both the JUN $32.50 and $30 strikes meet our JUN Week 1 criteria.  The puts closed Friday $0.46 and $0.16 respectively.  With the $32.50 strike you get 12.36% DSP.  This trade yields 1.4% ROIC with one week to expiration and has a PF of 5.3.  The $30 strike has 18.38% DSP, a 0.53% ROIC, and a PF of 3.5.

Another selection from earlier this month which reappeared this week is IDCC.  It closed Friday at $35.91, down $1.97 (5.2%) for the week.  The $32 strike at $0.30 has 11.72% DSP with a ROIC of 0.94%.

Well, that’s it for this week for our Deep OTM NP Strategy.  If time allows I’ll be back later in the day with another post updating my CSCO NP trade.

Regards,

Troy

 

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2 Responses to “Deep OTM NP Strategy – JUNE Week 1”

  1. Irene S. said

    RIM on the TSE (canadian)
    I did pickup some shares @ 35.96 on June 10-11. I also sold the june 18th $36 call for 1.62 which expires in one week. After comm. my breakeven is 34.50 and if my shares get called away my profit is 137.15 for each 100 shares. Profit is 4% for a week or 207% per annum. I wouldn’t mind owning it at 34.50 either.
    Irene

    • mounddweller said

      Irene,

      Sorry for the slow reply. It’s been a busy week thus far. RIM is down 50% from the 52-wk high and trades at only 5.5x earnings. I’ve got to think it will find a bottom very soon. Problem is the overall market looks like it is ready to fall significantly so this may push RIM down further than it might have gone otherwise.

      Regards,
      Troy

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