I bought a spread in CL.
music selection: “Alive and Kicking” — Simple Minds
weigh-in: 218.0 +0.4
First the closed positions. Three positions expired over the weekend. Two finished in the money and one finished with the low strike out of the money. I earned 765 on 3,735 capital at risk on PEP over 54 days. That is good for 20% or 138% annualized. The remainder of my position in NUE finished in the money (half the shares were assigned early) and I picked up another 320 on 1,680 capital at risk over 40 days. That is good for 19% or 174% annualized. Finally, the low strike in ADM finished out of the money resulting in me being assigned shares short at 60. I closed this morning for 56.51. On 3,645 capital at risk, I lost 155 dollars over 35 days for a 4% nick.
Colgate Palmolive (CL) is a Dividend Aristocrat and consumer staples company. It is mature and in its cash gushing phase and is a slow moving stock. It is a great candidate for in the money bear put spreads. The long term chart is trending up like just about everything in the market but the short term one month chart is slightly down and in a period of consolidation. I bought the 80/85 strikes combo at 4.60 a share, buying 10 spreads. I put 4,600 in capital at risk and the trade will be in force for about 26 days. I enjoy 3.71% downside protection from an upward move in price against me. If that protection is not breached at the end of the 26 days, I will earn the maximum potential profit in the trade of 400 dollars. That is good for 8.7% return on capital or 122% annualized.
Devour your prey raptors!