Monsanto (MON) is another of my favorites for selling options on. I think it has a good long term chance of moving higher and it’s volatile which pushes the premiums higher.
While MON was trading at $117.09 I sold one April 100 naked put (MONPC) and received $299.25 after commissions. It went above 120 briefly today, but the chart showed it could come down some. I wasn’t 100% sure it would drop too much so I left some money on the table with my limit. I actually started off with a 105 strike and lowered it to 100 to give myself more cushion. With $300 earned on $10k in reserves I figured the extra cushion down at 100 would be nice to have if MON declined 15-20%.
That’s generally my target, $300 on $10k in reserves for options written two months out. 3% every two months comes out to 18% annually. I over-invest so I don’t actually have the full $10k dedicated to just one stock. I also take losses of course so it’s not always simple, but when I see a chance like MON today where it’s trading $17 above the strike and I can still get $300 I tend to take it, especially when I think the stock could find its legs again soon. I also don’t have any other Basic Materials stocks so it helps my diversification.
Another note – I updated my holdings summary on my current portfolio page this morning. It doesn’t have MON listed since that came later.
Good to be commenting again. the trader’s posts are always helpful. the market is challenging. be sure you know what you are doing. good to be back. i’ll share trades, if i can get some successful ones! Kadena
Good to have you back.
Another candidate along the same lines is Caterpillar (CAT). The stock has been vacillating around $70, creating some decent PUT/CALL selling opportunities.
Yep, I own 100 CAT, have a covered call on it and also sold an extra naked put on it at the same strike since the premiums were so good.