I wrote puts on AbbVie Inc. (ABBV) last Monday.
music selection: “I Just Want To Be Your Everything” — The Bee Gees
I introduced AbbVie as a put writing candidate in part one of the eight part series. It is a strong pharmaceutical company with leading drugs and a well stocked pipeline. It was recently beaten up a little when the FDA approved a biosimilar drug from a competitor but has since recovered nicely.
I sold the 11MAR2016 expiry 48 strike puts (no Yahoo link, feed hasn’t picked up). I went out of the money to pick up additional downside protection. Like I’ve said before, the current market is guilty until proven innocent. I received 65 cents a contract in premium. The trade will be in force for 40 days and yields 12.36% annualized. Not too shabby. The trade has an impressive 10.76% downside protection versus the spot price of 53.06 at the time the contracts were written. The spot price has since climbed, giving me even more protection from assignment. I should do well here. And in the unlikely event I do get assigned, I’ll own a fantastic business at a favorable price.
There aren’t any more new trades to discuss as I’ve run out of invest-able capital. So I will continue with the eight part series on Friday. I then have five positions expiring on the 19th. I will detail what I do with the freed up capital thereafter.
Devour your prey raptors!