I have not been doing much options trading this Month – my preferred strategy of selling puts for companies I would like to own at lower prices is not particularly helpful during down markets – my current Palantir Technologies (PLTR) shares are a testament to that, I think the trade will work out well in the long run, and I lowered my cost basis by selling some puts last Month, but the paper losses right now are hurting my pride.
Rather than trading options, I have been concentrating on adding more equity to my overall portfolio as the market has sunk – and now have more than 25% of my main portfolio in equities via Vanguard Mutual Funds. If the market continues to drop, that % will grow.
I have been monitoring my options watch list and saw Anheuser-Busch InBev (BUD) drop well below my usual entry point of $55.00 per share today, so I made the following trade:
- Sold: 5 April 14, 2022 Puts
- Strike Price: $50.00
- *Premium Collected: $1000.00
If I am forced to buy the 500 shares, my entry price will be about $49.00 per share – over a 45% discount to BUD’s Morningstar Fair Value of $90.00 per share – providing a comfortable Margin of Safety. BUD pays a 2.1% dividend – not great but I will take it.
Hope this works out better than my initial Palantir trade!
Line up the Bud Light Ad:
*Excludes transaction costs.
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