Darden owns large restaurant chains in 50 different states including 786 Olive Gardens , 677 Red Lobsters, 386 Longhorn Steakhouses, and 8 Eddie V's Prime Steakhouses (one of my favorites) to name a few.
Their shares are trading around $45 near their 52-week low with a 52-week range of 44.12-57.93. Instead of buying shares at the current prices I decided to sell a put yesterday.
DRI has raised dividends for 8 consecutive years and has a 5-year CAGR of 25.8%. If assigned this could be a nice addition to my DG portfolio. They also came up on a screen I did here that showed they have a 10-Year YOC over 10%.
I sold 1 DRI July 20 '13 $44 Put @ 2.31
If I don't close out the position early then I will either get to keep the $231 or I will be put 100 shares at a cost of $41.69/share. This would be a YOC of 4.8%.
I now have 16 open options positions. This trade has been updated on my Options Tab.
Nice trade, AAI. Certainly not going to have to worry as much about the expense ration on your trades when you are clearing 200+ in premiums.
ReplyDeleteWith 16 open (14 Puts ~ 48k) option positions, are you planning on initiating many more?
Hi writing2reality,
DeleteTo answer you question, I don't plan to open many or any more positions until some of these are either expired or closed. I currently keep 10k in my options account. If the market tanks I will likely have to add more money to this account so I'm not using margin. I currently have about 1500 as a cushion before going into margin. I have one option expiring in two days that will free up a little. The rest of my options are purposely after tax time. The only drawback is if we have a huge pullback in the market , I will be forced to close those positions or add a lot of capital in order to get assigned the positions. I made sure they are mostly all companies I'd like to own anyways.
Thanks for dropping by!
This seems like a pretty good trade to me. DRI is one of those companies you just kind of skip past, until you look at how many different major restaurant chains they own.
ReplyDeleteHi My FIJ,
DeleteYou are right, I didn't know much about DRI until I saw an article on SA where David Van Knapp added it to his portfolio so I did some research. It also came up on a screen I did.
Take care!