WDC – When Did Your Stock Grow Up?

I read about Western Digital Corp (NYSE: WDC) in this weekend’s Barron’s. It’s been a while since I followed WDC and was surprised to learn that they now have no debt. They have strong cash flow and their lagging technology model may become a big reason for their continued profits to keep rolling in.

I put a limit out to sell 5 July 17.50 naked puts at .70. The bid/ask is .50/.60 right now after WDC finished up .30 on Friday.  I think selling at .70 gives me enough cushion if it dips. What I have to decide is if I should go in closer to the ask or even reduce my number of puts and possibly sell ITM. I doubt I’ll go for the latter. I doubt that will be enough to make my .70 puts hit, but it could be as someone might panic into paying than they should.

I can’t get a fantastic read on their chart yet, but will follow it more as time goes by. Going back 18+ months it seems 16 might be a bottom range which would keep me in a decent range to continue writing covered calls if my puts don’t expire worthless.  The stock price has moved above its 10, 20 and 50 day moving averages recently, but the trend line doesn’t seem to show a great near term future.  Again, that’s why I’m putting my limit above the current ask.

Click on the thumbnail to see the chart: