It's no secret that I'm a big fan of Target. I've been adding shares now for months and have finally brought TGT up to a full weight (2.5% of my 40 position portfolio). Shares have been under weakness lately in the midst of a broader market rally. I decided to take advantage of this fact and sell a TGT put. If you did any holiday shopping here, you would have seen how busy the store is. Actually, TGT is always busy where I live any time that I go in. I think the company has a bright future and I like the recent dividend growth. I wouldn't be surprised to see the quarterly payment rise to .50 with the next increase.
Here's the trade:
I sold 1 TGT July 19 '14 $60.00 Put @ 2.83
This trade could turn out a few ways:
1) I hold shares until expiration and shares are trading above the strike. I will get to keep the $283 in options premiums.
2) I hold shares until expiration and shares are trading below the strike. I will get assigned 100 shares of TGT at a cost of $57.17/share This is more than a 10% discount to my cost basis! Who doesn't love getting a discount?
3) Shares of TGT go on a run and I decide to buy back the put early for a profit less than $283.
I currently have 10 open options positions and a total options profit of $4149 for 2013. My options page has been updated accordingly.
I have no idea how options trade work. I need to start reading up on it. I brought some shares of TGT today. plan on buying more if it goes to mid $50.
ReplyDeleteHi FFdividend,
DeleteI'd recommend going to my options page at the top and reading my introduction to options article. It might help. For me, I try to stick to selling puts against companies I want to own anyways. To me, this is a win/win. I either collect the premiums for waiting or I get to purchase shares at a discount.
If Targets gets to mid 50's I'll certainly be buying more.
Thanks for stopping by!
Now that sounds like a win-win AAI. Good work. Worse case you buy the shares cheaper than they are today, and keep your $283. Haha Merry Christmas
ReplyDelete-Bryan
Hi Bryan,
DeleteThanks! I agree with you and this is the reason I love using options.
Merry Christmas to you as well.
TGT is one of the few stocks on my watch list that I'm close to buying right now. Beyond that, it's slim pickings, so I may end up not buying anything else in December.
ReplyDeleteThe market keeps going higher and Target keeps creeping a little lower. I may end up buying more shares outright if it gets under 60/share. I tend to agree that the pickings are slim. This is really frustrating. On one hand, my portfolio value is high which is a plus to my confidence but that means all of the companies I want to own more of are more expensive and yield less. I just hope we can a correction soon.
DeleteThanks for stopping by!
That would be a great price for TGT. I had placed a limit order and let it expire last week (50 @ $61). I'll be keeping a close eye on TGT but right now i'm looking at pulling the trigger on Ensco (ESV).
ReplyDeleteI don't know much about Ensco so thanks for pointing it out and I'll be taking a look.
DeleteCheers!
Nice buy and thanks for another tip for put selling. I added the stock to my put selling list.
ReplyDeleteThanks Martin. I'm glad I pointed it out to you. Good luck with your options trade and Merry Christmas!
Delete