The Money Tree

Safely Generating Income in Retirement

Weekly NP Strategy – MAR 9 Exp.

Posted by mounddweller on March 1, 2012

Fellow Traders,

My apologies, It’s been hit or miss the past few weeks with me posting the Weekly NP Strategy selections.  But, this week, I’m back with another round of trades for you to consider.

It was pretty slim pickin’s this week.  Only 33 trades met our 5% DSP and 0.5% ROIC selection criteria.  Of those only 2 caught my eye as good possibilities.

First up is Abercrombie & Fitch (ANF).  This isn’t the first time it has shown up on our Weekly NP Strategy screen.  This week its the $45 strike price we’re interested in.  The stock closed today at $47.33 and the $45 put has a bid premium of $0.33.  This gives us a 0.73% ROIC with 5.62% DSP.  ANF has a 52-wk low of $40.25 which it hit exactly one month ago.  Looking at the 1-yr chart you’ll see ANF has solid support at $45.  It bounced off this level several times over the past few months before finally succumbing to the repeated pressure in early February.

My second selection this week is a trade very similar to the one I made earlier this week.  It involves the ETN, VXX.  You may recall VXX tracks the performance of the volatility index VIX.  Earlier this week I placed a trade selling the regular MAR monthly expiration puts at the $22 strike.  The weeklies at the same strike also look like a good trade.  The MAR 9 $22 put has a bid premium of $0.22.  The ETN closed today at $24.14 giving us a 1.00% ROIC with 9.78% DSP.  While VXX has a 52-wk low of $19.88, it hasn’t closed below $23 in several months.

Well, there you have it.  Just two trades this week, but both I think are worthy of your time and further due diligence.

Regards,

Troy

PS.  Oops, almost forgot.  If you want to see the other 31 trades you can find them here:

http://finance.groups.yahoo.com/group/CoveredCalls-NakedPuts_OptionStrategies/files/

 

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2 Responses to “Weekly NP Strategy – MAR 9 Exp.”

  1. Jason said

    ANF is about the only thing I’m trading right now. Everything else I’m following has gotten a little pricey on the valuation side. Been doing mostly weekly puts for the last couple months. You can wait until mid-week on this one and still find a compelling strike to make about 1% with only a few trading days left. Premium in the calls, if assigned, makes this one a pretty easy position to manage as well. I also entered into some further out put positions when the stock reached the low $40s before earnings. You can get a nice return with a deep OTM strike that offers significant downside protection on the longer dated puts. I usually like a little better dividend yield, but the valuation and option premium are too compelling for me to pass on.

  2. Len Petry said

    What does “DSP” stand for, please? Being new to the site, I think it is better to get the stupid questions out of the way earlier than later.

    ALso, in “ROIC”, what the “C”stand for? Return on Invested Capital, I am guessing.

    Len

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