I wrote a long dated put.
music selection: “No Woman, No Cry” — Fugees
Biogen (BIIB) has mostly traded sideways for years. I like its current prospects thanks to an Alzheimer’s drug under development. The company also shares a 50% in the most likely leading competitor drug for Alzheimer’s plaque removal.
With volatility high, it is possible to write a deep out of the money put that earns an acceptable rate of return. In this case, I wrote a put with downside protection of 26%. I sold BIIB220121P00280000 for 52.10 a share. The trade will be in force for 633 days and yields an expected 10.73% annualized.
I think I’m getting a good return and some upfront cash on a position that is highly unlikely to be assigned.
Devour your prey raptors!