Today I sold Put options on a new master limited partnership (MLP) – Enterprise Products Partners L.P. (EPD). You may ask why I chose them over Enbridge Inc. (ENB), who I have traded in the past? Better assets, a lower valuation, and a better dividend.
I still like Enbridge, but could not pass up this opportunity to upgrade. Here are the details of the trade:
- Sold: 10 Jan 18, 2019 Puts
- Strike Price: $25.00
- *Premium Collected: $600.00
If I am forced to buy the 1000 shares, my entry price will be $24.40 per share – almost a 31% discount to EPD’s Morningstar Fair Value of $35.50 per share. EPD is currently paying a 6.65% dividend – and, according to Morningstar “It is the pre-eminent midstream infrastructure company, vertically integrated with best-in-class assets at nearly every point in the midstream value chain.”
*Excludes transaction costs.
Leave a Reply