A Tough Day (to look at Your Account Statement)
By Paul Price of Market Shadows
If you worry about daily fluctuations on your brokerage statements you probably were not happy today.
Those who want to buy stock, or sell puts (to possibly buy even cheaper), might have felt differently.
I used today’s action to write some long–term Mead Johnson (MJN) puts. Selling Jan. $75 and $80 strike price puts brought my break-even price down to levels near strong technical support since May of 2011.
By collecting premiums of $11 per share for the $75 and $14 for the $80 puts, respectively, I reduced the ‘if exercised’ prices to $64 and $66. I view the two-year expiration horizon as a positive.
These put sales leave plenty of time for the current market volatility to dissipate. It also allows 23.5 months for Mead Johnson’s fundamentals to continue their steady improvement.
Each year since MJN’s 2009 spin-off from Bristol-Myers Squibb (BMY), MJN has set a new EPS record. Dividends have grown by over 94% over that span.
