Date post: | 13-Apr-2017 |
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Economy & Finance |
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The informaCon provided in this presentaCon is general informaCon only. It has been prepared without taking into account your objecCves, financial situaCon or needs. Before acCng on this informaCon you should consider the appropriateness of the informaCon, having regard to your own objecCves, financial situaCon and needs. Where quoted, past performance is not indicaCve of future performance. M Elizabeth Bridge disclaims all and any guarantees, undertakings and warranCes, expressed or implied, and shall not be liable for any loss or damage whatsoever (including human or computer error, negligent or otherwise, or incidental or consequenCal loss or damage) arising out of or in connecCon with any use or reliance on the informaCon or advice on this presentaCon. The user must accept sole responsibility associated with the use of the material in this presentaCon, irrespecCve of the purpose for which such use or results are applied. The informaCon in this presentaCon is no subsCtute for financial advice.
Short Put Selling
• Out-‐of-‐the-‐money* puts are sold on stocks the investor wouldn’t mind owning
• If the stock price stays around the current price, or advances, the investor keeps the premium when the opCon expires
• If the stock price declines below the strike price, the investor gets assigned the shares
*out-‐of-‐the-‐money = strike price is below the current market price.
Important
• Pick good value stocks that are trading near the 52 week low.
• Do your research and make sure you are comfortable owning the stock at the strike price.
• Write Puts for a short Cme-‐frame.
Pick Stocks Trading Near 52 Wk Low
Company name Symbol Currency P/E ra3o 5y EPS growth rate
10y EPS growth rate
Return on equity
(5 yr avg) (%)
Return on equity
(Recent yr) (%)
Gross margin (%) 52w high 52w low Last price % of Low
Compass Minerals InternaConal, Inc. CMP $ 11.11 5.67 15.75 31.81 35.83 36.41 95.68 78.88 79.68 101% Nelnet, Inc. NNI $ 5.8 18.69 8.95 20.08 19.22 60.3 48.8 36.14 36.52 101% Waddell & Reed Financial, Inc. WDR $ 10.74 24.63 11.52 39.35 42.53 49.99 57.33 36.5 37.13 102% America's Car-‐Mart, Inc. CRMT $ 10.95 7.49 8.09 14.54 13.33 42.35 57.55 34.84 35.64 102% PPL Corp PPL $ 10.42 16.78 2.16 12.75 12.06 35.38 38.14 29.32 30.15 103% Dillard's, Inc. DDS $ 11.66 53.01 18.68 15.93 16.55 36.61 144.21 89.37 91.9 103% Alliance Holdings GP, L.P. AHGP $ 7.96 20.01 20.38 53.56 53.62 37.75 74 34.3 35.36 103% InternaConal Business Machines Corp. IBM $ 9.66 9.28 13.51 78.68 90.89 50.14 195 140.62 145.02 103% Copa Holdings, S.A. CPA $ 8.18 7.51 17.66 22.33 18.19 70.92 127.58 48.38 49.9 103% Companhia EnergeCca Minas Gerais (ADR) CIG $ 3.69 8.02 6.07 25.94 26.23 36.88 8.68 1.96 2.03 104% Bridgestone Corp (ADR) BRDCY $ 10.08 210.44 10.68 12.45 15.48 37.68 21.71 15.62 16.19 104% Westlake Chemical CorporaCon WLK $ 9.85 66.07 16.61 22.22 25.4 29.12 98.44 50.01 51.84 104% SL Industries, Inc. SLI $ 11.81 41.71 12.18 18.06 20.78 26.26 51.96 33.25 35 105% Graco Inc. GGG $ 11.5 35.06 8.97 39.97 36.67 53.84 82.14 63.44 66.79 105% SK Telecom Co Ltd (ADR) SKM $ 8.76 4.3 1.86 13.24 12.76 94.44 31.84 21.7 22.99 106% Encore Capital Group, Inc. ECPG $ 9.08 24.44 14.53 17.69 17.63 77.38 46.18 36.4 38.65 106% CTC Media, Inc. CTCM $ 4.12 1.68 8.62 15.74 18.99 48.64 9.81 1.56 1.67 107% Fossil Group Inc FOSL $ 8.86 27.91 19.19 30.39 36.81 56.17 115.2 56.01 60.58 108% Helmerich & Payne, Inc. HP $ 9.76 12.62 65.11 14.95 15.1 46.55 105.5 49.99 54.61 109% Yahoo! Inc. YHOO $ 4.61 77.75 29.2 19.29 29.03 66.71 52.62 29 31.77 110% Universal Health Realty Income Trust UHT $ 9.81 20.61 8.05 20.5 27.85 71.19 57.55 41.15 45.16 110% TAL InternaConal Group, Inc. TAL $ 4.92 9.85 26.21 19.87 18.26 86.85 45.91 15.65 17.3 111% Textainer Group Holdings Limited TGH $ 5.74 11.98 9.07 21.06 16.54 89.03 36.22 15.5 17.31 112% American Public EducaCon, Inc. APEI $ 10.18 12.97 26.49 25.52 18.53 64.25 37.46 19.22 21.49 112% Seagate Technology PLC STX $ 9.54 10.88 14.09 56.23 59.56 27.73 69.4 44.46 49.77 112% Atwood Oceanics, Inc. ATW $ 2.9 6.14 44.15 16.58 14.31 58.41 49.52 15.56 17.54 113% YPF SA (ADR) YPF $ 8.64 28.22 8.36 16.27 14.92 25.35 37.76 18.9 21.36 113% Taiwan Semiconductor Mfg. Co. Ltd. (ADR) TSM $ 11.36 24.24 13 25.59 27.86 49.51 25.77 17.32 19.94 115% CNOOC Ltd (ADR) CEO $ 5.45 15.36 13.1 21.68 16.69 59.94 202.33 98.05 115.17 117% Sasol Limited (ADR) SSL $ 7.39 16.78 18.6 19.09 18.46 55.99 59.82 27.32 32.11 118% Publix Super Markets Inc. PUSH $ 8.31 8.64 9.17 17.8 16.13 28.04 25 17 20 118% The Western Union Company WU $ 11.19 5.57 4.9 109.25 70.88 41.61 22.84 15.31 18.05 118% Twenty-‐First Century Fox Inc FOXA $ 6.92 32.4 18.94 22.16 48.35 35.97 39.27 22.81 26.95 118% Tandy Leather Factory, Inc. TLF $ 11.22 19.44 12.01 15.72 16.44 61.61 9.97 6.52 7.71 118% Ever-‐Glory InternaConal Group Inc EVK $ 3.9 30.8 18.01 24.56 25.22 28.9 7.2 3.17 3.81 120%
Research Two really great resources for researching your stocks: hnp://seekingalpha.com/ hnp://www.gurufocus.com/ Bonom Line – make sure you feel comfortable owning the stock at the strike price. Do your research and evaluate the strike price – is it a fair price for the stock? The stock market oren moves in irraConal ways. You have to be comfortable owning the stock if your opCon is exercised.
OpCon Chain -‐ CMP
For example, consider CMP, currently trading at $80.15. An out-‐of-‐the-‐money put with a strike price of $75 can be sold for $1.35, resulCng in a credit to your account of $135. The $135 is yours to keep, no maner what. Worse case, you’ll end up paying $7,500 for 100 shares of stock. Subtract the $135, and your effecCve basis is $7,365, or $73.65 per share.
Important Note: One Put Contract = 100 Shares
What happens next?
The opCon contract expires on October 16, 2015. Regardless of what happens to the stock price, you collect the opCon premium. If the stock price dips below $75, the 100 stocks per contract are assigned to you. You have to feel comfortable owning the stock, holding it, and waiCng for the price to go back up.