Monday, 10 November 2014

Options Trade - General Mills


Earlier this week, I sold my very first Put. And today, I sold my second.

I sold puts in SNC-Lavalin and General Mills because their share prices have dropped some. I would have liked to sell puts during the recent short-lived correction, but I was approved for put options trading after the market ‘rebound’.

Today’s options trade:

Sold 1 GIS Put Apr 17 ’15 $47.50 Put @ 1.08 ($11.20 commission + $0.01 SEC fee)

My net premium is $96.79.


The most likely outcomes of this trade are:
  1. Shares are trading above $47.50 at expiration. I will get to keep the $96.79 in net premiums.
  2. GIS is trading below $47.50 at or before expiration and shares are assigned. I will receive 100 shares of GIS at a net cost of $46.53/share.


2 comments:

  1. Do you target any specific return/option yield when you sell puts? Or are you just targeting companies at prices you like? I prefer to target 10% annualized returns if the option goes expiration but for some of the large consumer staple companies dont offer those kinds of returns without the markets being a bit more volatile. Looks good though and I wouldn't mind adding to my position in GIS, especially at those prices.

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    1. I didn't think about calculating a return on my puts. My objective is to sell puts with a strike price that equates to a price I would like to buy shares at. At the moment, my puts are covered. But when my cash runs out, I will sell naked puts.

      After reading your comment, I calculated the annualized return on my two puts:
      SNC - 11.8%
      GIS - 4.8%

      Cheers

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