The rumors have been floating around for a while that AT&T (T) planned to extend their reach into people’s houses with a better TV offering. Now it appears Echostar (DISH) is the target. T wants to pay around $55 per share while DISH doesn’t want to take less than $65. DISH closed yesterday at $43.47.
I’m guessing the negotiations will drag on for a while and then they have to get regulatory approval which will drag it on even longer. In case I’m very wrong on my dates, I sold puts that expire only three weeks from tomorrow. While DISH was off of its early afternoon highs and trading at 46.09, I sold two October 45 naked puts (UABVI) and received $308.50 after commissions.
I hadn’t planned on trading today since I’ve been on somewhat a trading frenzy this week, but then a co-worker walked by me yapping about the article he had just read. I found a couple of articles and verified what he was saying and went straight to Ameritrade to check out the options. Volatity is still high and the stock is still $10 away from the low end of the price range. That must mean that a lot of people don’t think the deal will work out. I believe T (full disclosure: I work at AT&T) feels DISH is a must have and will figure out how to make it work. I didn’t get greedy and try to sell ITM naked puts, but didn’t go too far OTM. Having the shorter time to expiration will help me as the premiums should start dropping soon, even on no news. If it stays flat, I’ll likely write another option one month out again and continue to capitalize on the uncertainty surrounding the deal.
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