We’re taking advantage of a pullback to sell out-of-the-money puts on a name we like.
Teen retailer The Buckle (BKE) is debt-free and has paid both regular plus significant special dividends during seven of the past eight years.
General industry weakness has pushed BKE shares down from last summer’s peak of $56.48 to just $44.27. The company has sterling metrics where it counts. Their slightly above average volatility creates good option premium.
Market Shadows sold two contracts of the Sep. 20, 2014, $40 strike price puts today @ $2.25 per share. Our break-even computes to $37.75 per share, ($40 strike – $2.25 option premium), a level last seen in August of 2012.
Our maximum profit on this fairly conservative position would be keeping the $450 put premium without having to buy any shares. Our worst case commitment is to stand ready to own 200 shares at what would now be a 17-month low.
This trade has been added to our Virtual Put Selling Portfolio’s list of open transactions.
To see all our closed-out and presently held options positions click here.
