Monday before last, I wrote a put on CHRW.
music selection: “Hold The Line” — Toto
weigh-in: 214.0 +0.6 – Doh!
Shares were previously called away at 67.50. I’m back into the trade at the same strike. I needed to go a little further out time-wise to find liquidity in the options. I sold CHRW160520P00067500 for 2.20. This trade will be open for 89 days and yields 13.37%. The gamer in me likes that percentage. The spot price at the time I wrote the contract was 70.48. So downside protection was a very strong 7.3%.
Since writing the contract, share price has continued to rise giving even greater downside protection. With Friday’s close at 72.68, it looks very likely the contract will expire out of the money and the full 13+ percent will be collected. I really love that I can routinely beat the long term 9% average of the market by lowering my risk. Selling options is truly the way to go for an income investor.
I’ll be back Wednesday to update on what I did with the expired ABBV position.
Devour your prey raptors!