I was finally able to make the trade I wanted at my limit price for GSK PLC ADR (GSK) – trading at its 52-week low today. Here is the trade:
Sold: 10 Sept 30, 2022 Puts
Strike Price: $31.00
Premium Collected: $543.37
The stock is down over concerns regarding legal cases related to a potential cancer side effect from the over-the-counter heartburn medicine Zantac – which has been distributed by many firms including GSK. I am comfortable with this risk – feel the selling has been overdone.
If I am forced to buy the 1000 shares, my entry price will be about $30.50 per share – over a 43% discount to GSKs Morningstar Fair Value of $54.00 per share – providing a comfortable Margin of Safety. GSKs dividend is over 7% – which is great! If I am forced to buy the shares, I can sell calls on those shares in Oct. 2022 and still collect the large quarterly dividend in early Nov. 2022.
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