Played Valmont Again on Today’s Dip
By Paul Price of Market Shadows
Just after its earnings announcement Valmont Industries (VMI) dropped down to an intra-day bottom of $144.75.
Plunges like today’s, on shares I love, are gifts that should not be refused.
In my personal account, I sold some Sep. 2014, $145 puts @ $9.80 when the shares were trading right around the $146 mark.
I will either pocket the $980 per contract premium or end up owning VMI for a net cost of $135.20 per share ($145 strike price – $9.80 put premium).
The worst case scenario would leave me picking up additional VMI shares very close to the low of the last 12-months and well below my one-year target price of at least $160.
Market Shadows already owns Valmont in our Virtual Value Portfolio and is short one contract of the VMI March $145 strike price put in our Virtual Put Writing Portfolio. We’ll continue to hold both positions.
I fought the urge to add any more exposure in our virtual portfolios order to adhere to own own rules for maintaining proper diversification.
