I wrote puts on Microsoft Corporation (MSFT) on Monday.
music selection: “The Sound Of Silence (cover)” — Disturbed
Previously, I had 52 strike written puts that expired safely out of the money. I was able to improve safety while maintaining a 12% yield by moving down to the 49 strike. I sold MSFT160422P00049000 for 65 cents a contract. The trade will be in force for 40 days and yields 12.10% annualized. Versus the spot price of 53.07 at time of writing, the trade has 8.89% downside protection.
Microsoft is a very strong company with great cash flows. It rewards shareholders with dividends and share buybacks and has a measure of safety in the form of 102 billion in cash and short term investments on the balance sheet. Net of cash, its valuation is very attractive.
In other news, I have positions in AT&T and Cheneire energy expiring today. All three legs should expire safely out of the money. I’ll roll the positions forward on Monday.
Devour your prey raptors!