Wednesday, 22 April 2015

Options Trade - Starbucks

On April 22, I sold a put in Starbucks. The trade:

Sold 1 SBUX Put Jan 15 '16 $45 Put @ 2.25 ($11.20 commission + $0.01 SEC fee)

Days Held (sell date to expiry): 268

Net Premium: $213.79

Annualized Return = ($213.79 / ($4,500 - $213.79)) * 365/268 = 6.79%

The most likely outcomes of this trade are:

1. Shares are trading above $45.00 at expiration. I will get to keep $213.79 in net premiums.

2. SBUX is trading below $45.00 at or before expiration and shares are assigned. I will receive 100 shares of SBUX at a net cost of $42.86/share.

I don't find SBUX shares attractively valued, but everytime I walk into one of their shops, there's a line-up. And that I like.

Visit my Options page to view other trades I've executed but have not written about.

2 comments:

  1. Reading about your options trades makes be excited to get back into it as well! Do you ever decide to buy back the option at around 50% profit after theta decay has reduced its value?

    ReplyDelete
    Replies
    1. Hi Scott, When I started buying options late last year, my strategy was to let them expire. Now that I'm getting the hang of it, i've BTC some options when the stock price has increased, resulting in some quick profits. I'll have to read up on the strategy you propose. Thanks.

      Delete