Not sure if the market hates real estate or banks more – both have done horribly of late. Strange how different stocks trade in a high rate environment – easier to just keep your money in cash and collect your 5%. With that said, I placed a Cash Secured Put trade on Realty Income Corp (O) today. Funny, I was going to make this trade a week ago for about $500.00, so getting $650.00 with less time left is kind of a win.
Despite the potential for it to go lower, I’m willing to make the trade at this level for income in my retirement. I feel I have balanced the risk / reward appropriately based on my theoretical entry price and the short term nature of the trade.
Here is the trade:
- Sold: Ten (10) Nov 17, 2023 Puts at $0.65
- Strike Price: $47.50
- *Premium Collected: $650.00
If I am forced to buy the 1000 shares, my entry price for Realty Corp would be *$46.85, which is below its 52-week low and a 38% discount to Realty’s $76.00 Morningstar Fair Value estimate. Realty Income Corp also pays over a 6% dividend that I will start collecting in December 2023 if I am put the shares.
*Excludes transaction costs.
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