I bought a spread in Nucor (NUE).
music selection: “Sunshine of Your Love” — Eric Clapton
weigh-in: 218.2 (1.0)
First some cleanup. I was assigned 100 shares of HRL early. I bought 18 spreads with the 52.5/55 strikes on 23NOV2020 for 2.0822 per share. I closed out 100 shares at par today booking 42 dollars in profit over 50 days. That’s good for 146% annualized return.
Nucor is a steel producer that is focused on recycling old steel. It is a dividend aristocrat with 46 consecutive years of dividend increases. With a market cap over 17 billion I expect it to be slow moving and a good candidate for a bear put spread. With shares trading at 56.21, I bought the 60/65 strikes spread for 4.1989 per share. The trade enjoys 6.74% downside protection against an upward move in share price. I expect to be in the trade for about 40 days till expiry. Should downside protection not be breached, I will earn 721 dollars on 3,779 in capital at risk over 40 days. That is good for 19% or 174% annualized.
My trades expiring Friday all look to be safely in the money. It is likely I will collect over 10k in profits over the weekend. All this has been done with downside protection that isn’t afforded to the buy and hold indexer.
Devour your prey raptors!