Options Trade – Anheuser-Busch InBev (BUD)

I have been holding back on trading – not really finding any value in this Market. Today, I pulled the trigger on a new trade with Anheuser-Busch InBev (BUD) – here are the details of the trade:

• Sold: 5 November 19, 2021 Puts
• Strike Price: $55.00
• *Premium Collected: $775.00

If I am forced to buy the 500 shares, my entry price will be about $53.45 per share – over a 40% discount to BUD’s Morningstar Fair Value of $90.00 per share – providing a comfortable Margin of Safety.  BUD pays a 2% dividend – they cut the dividend by 50% last year citing uncertainty around demand due to COVID-19.

This has been one of my go to trades over the last two years at the $55.00 strike. Not an exciting pick – but I really like companies with large cash flows – and BUD fits the bill.

Hopefully they can capture some of the Seltzer Market:

*Excludes transaction costs.