Going for Broke(r)
We are taking advantage of this morning's weak opening.
By Paul Price of Market Shadows
Market Shadows Virtual Put Writing Portfolio sold six contracts of the Jan. 17, 2015, $19 strike price puts on Interactive Brokerage Group (IBKR) this morning.
The stock has come down from $25.03 in the wake of the ubiquitous high frequency trading (HFT) discussions.
IBKR’s reputation is outstanding. It was recently named as Barron’s best on-line brokerage firm for the third straight year.
With the shares trading for $21.02 we received $1.10 per share for committing to buy, if exercised, at a net price of $17.90 per share ($19 strike – $1.10 put premium).
Our ‘if put’ entry point is below the lows for IBKR during the past six months. At $17.90 the 10-cent quarterly dividend would provide a 2.23% current yield.
Our maximum profit will be 100% of the $660 collected upon sale of the puts. The worst-case scenario would leave us owning 600 shares of a fine company at what now appears to be an attractive entry price.
