I’m continuing to position defensively as the election approaches.

music selection:  “Run With The Pack” — Helstar

weigh-in:  216.2 (0.2)

No positions expired over the weekend and none expire until 13NOV2020.  My November expiries are mostly well within the money.  KO has been skirting the edge but I expect it to be stable no matter what happens with the election.  I’m on track to earn 4,436 in closed options income for the month.

Dover (DOV) is a specialty machinery company and a Dividend Aristocrat with 57 consecutive years of dividend raises.  It is as stable as they come.  With shares trading around 113 dollars, I bought the 125/130 strikes bear put spread.  I’m at the 18DEC2020 expiry which will be in force about 54 days.  I have substantial downside protection with an upward move of more than 9.79% required to threaten profits.  Any move of that size for DOV is likely to be to the downside in the event of a broad market selloff.  I’m positioned to have my spread only become more valuable in that scenario.  I got into the spread with $2.45 pricing.  The upside is 12% over 54 days or 84% annualized.  I have 9 spreads with 4,005 dollars at risk.  I fully expect to book the maximum 495 in profits at expiry.

Devour your prey raptors!

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Bear Put Spread on Dover (DOV) with 84% expected return

Never miss another opportunity to devour prey!

4 thoughts on “Bear Put Spread on Dover (DOV) with 84% expected return

  • October 28, 2020 at 6:11 am
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    I totally like your approach of not following the scheme of just selling options as everyone else is doing (at least i feel so)

    Reply
  • October 30, 2020 at 3:53 am
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    Did you write the dollar price of that spread correctly? 12% of $5 is $0.60, so would the price of the option be ~$4.40? Seems close to right.

    DOV is sporting a beta of 1.38 so it’s fairly volatile, but I agree that downside is more likely. Of course it’s down $6 in the past few days so maybe I’m a Monday morning quarterback.

    Reply
    • October 31, 2020 at 9:01 pm
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      I got into DOV at $4.45 average pricing. I’m now at 12.91% downside before profit is threatened.

      Reply

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