By Paul Price of Market Shadows
Laboratory testing giant Lab Corp. of America announced lowered guidance for this year and 2014. The shares were down more than 8% in early trading to $90.55.
Market Shadows still likes the long-term prospects of this solidly financed market leader. We sold one May 2014, $90 put for $4.50 per share in our Virtual Put Writing Portfolio .
The maximum profit would to keep the entire $450 premium received without having to buy any LH share. That will occur if LH holds above $90 through the May $17, 2014 expiration date.
If the put is exercised we will be forced to buy 100 shares at a net cost of $90 (the strike price) less $4.50 (the put premium) = $85.50 per share.
Lab Corp’s 52-week range has been $84.91 – $108.00 with the top quote having been hit just weeks ago.
We had previously booked a $400 profit with LH in our put selling portfolio on May 2013 $97.50 puts that expired worthless last spring.
NOTE:
It always amazes me that people who loved LH at $108 in November will be selling the same shares at under $90 in December. LH went into the $89’s around 11 AM. I bought some shares for own account to compliment the put sale.
