I sold puts on AT&T today.
music selection: “Fixed” — Stars
I originally planned to not write any more puts until some positions expired. But I had some small positions in junior gold miners I picked up at year end hoping that the decline in price was tax loss harvesting and the price would rebound in early February. That play worked as planned and I took my profit on Thursday, freeing up about 13,000 in invest-able capital. I deployed that in three 36 strike T puts, putting 10,800 at risk.
This trade is a little different than recent written puts where I have been going out of the money for additional downside protection. I very much want to get assigned here so I can collect the 5% yield while writing out of the money covered calls waiting for price appreciation. I expect 4% dividend raises yearly for quite some time. I also expect at a hard to predict time in the future a big uptick in business. AT&T has the most fiber optic cable in the United States. It was able to deploy cable cheaply by running along telephone poles instead of having to bury line. As the Internet of Things becomes a reality, Americans will use increasingly more data. AT&T will reap rewards as copper will not be up to the task and it will take competitors many years and billions of dollars to lay competing infrastructure.
Anyway, I sold T160318P00036000 for 80 cents a contract. The trade will be in force for 36 days and yields 22.53% annualized. Downside protection is minimal but that is by design as I am desire assignment in this case. If more capital comes available, I may strangle this after assignment to continue building the position.
Devour your prey raptors!