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!

Bear Put Spread in Nucor (NUE) with yield up to 174%

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