A New Stock Bought – New Puts Shorted
By Paul Price of Market Shadows
Market Shadows added 100 shares of Israeli-headquartered Teva Pharmaceutical Industries (TEVA) to our Virtual Value Portfolio.
We purchased at $39.96 per share with cash from our reserve fund.
We also sold 1 contract of the Jan. 2015 $42.50 strike price put @ $6.05 and 1 contract on the Jan. 2016 $45 put @ $9.50 per share. Those option trades will be followed in our Virtual Put Writing Portfolio.
At $39.96 TEVA trades for just 8x 2013 estimates , excluding non-recurring charges, and yields 3.27%.
The break-even prices on the 2015 & 2016 expiration date puts are $36.45 and $35.50 respectively. Those ‘if put’ levels are very close to the absolute low prices dating all the way back to 2008.
Research firm Morningstar rates TEVA with 4-stars (out of five) and lists fair value as $48.
See full details on our equity portfolio by clicking here.
View all Market Shadows’ open and closed-out option positions by using this link Put Selling Portfolio Details.
