Options Trade – Merck (MRK)

Yesterday I sold 10 February 2016 Put Contracts (50 Strike) for MRK – to open a trade. *Premium Collected: $980.00

Here is my strategy breakdown on MRK:

• Sold the puts with a large Margin of Safety built in – with the $980.00 premium collected, my effective MOS is over 22%.
• If I get put the Merck shares – I will collect a Dividend in early March 2016 – $450.00.
• I will immediately sell longer term Call Options to lower my Margin of Safety even more – estimate another $1,000.00 in premium.

I feel the real risk in taking this trade right now – is the current market volatility – Merck is already down more today – but if you try to time you trades perfectly, you will never make a trade.

I also need more equity exposure given that overall market valuations are getting lower – so I would be happy buying Merck in February 2016 for $49.02 per share – it is a great company.

*Excludes transaction costs.