I wrote a cash secured put on QCOM on Monday.
music selection: “Ace of Spades” — Motorhead
Qualcomm is one of the Big Cheap Tech names I favor such as Apple, Cisco, and Microsoft. These are companies with strong free cash flow, growing sales, fortress balance sheets, that are cheap after backing out the horde of cash they keep on the balance sheet. They also tend to have fat options premiums despite their slow moving megacap status. I previously had a written put on QCOM that expired worthless on Friday and I’m going to bat here again.
I was able to sell QCOM160422P00047000 for 65 cents a contract. The trade will be in force for 40 days and yields 12.62% annualized. I went a little out of the money for more downside protection on the continuing belief the market is guilty until proven innocent. I’ll remain defensive until the S&P 500 closes above 2,131. The trade has 11.24% downside protection before I could see unrealized losses. I feel pretty good about my chances, especially since my ‘downside’ is owning a great company with a yield over 4%.
Devour your prey raptors!