The Money Tree

Safely Generating Income in Retirement

Archive for August 18th, 2011

New NP Trades

Posted by mounddweller on August 18, 2011

Fellow Traders,

I entered three new NP positions today.  One is a weekly, the other two have a regular SEP expiration.  Below are the details of my trades:

First, let’s look at my Gamestop (GME) trade.  Long-time readers of my blog know that I’ve traded GME several times over the past few years.  It is a stock I’m comfortable trading at the right price.  Yesterday, after the market close they announced quarterly earnings.  Analysts weren’t happy with what the initially saw in the press release and the stock sold off hard at the open this morning.  Luckily, I was paying attention at the right time.  I was able to sell the SEP $18 puts for $0.65.  This all happened within the first hour of trading this morning.  Later in the day analysts (probably after the earnings conference call) formed a different opinion and the stock recovered swiftly, closing at $21.43 up 4.94%!  My ROIC for this trade is a very nice 3.49% with 16% DSP (based on the closing price of $21.43).

Next up is INTC.  I’ve been wanting to get back into an INTC trade for sometime now and finally today the opportunity presented itself.  I STO 5 AUG26 $19 puts at $0.20.  In my humble opinion INTC is a great buy at $19 so I have no qualms selling puts at that level regardless of market conditions.   If INTC holds above $19 my one-week ROIC will be 0.94%.  Annualized that’s north of 50%.

Last, but certainly not least, is another blue-chipper, JNJ.  I STO 2 JNJ SEP $57.50 puts at $0.62.  My ROIC for this trade is right at 1.00% with 8.96% DSP.  The reason I like this trade comes from my review of the 2-year price chart.  JNJ exhibited strong support at $57.50 during the sell-off last summer.

Other stocks I’m keeping an eye on for a possible NP trade are: T, ABT, MDT, CSCO, AFL, WMT.  You’ll notice all are solid blue-chip companies.  Now is not the time to gamble with anything but the very best.

Regards,

Troy

 

 

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