By Dr. Paul Price of Market Shadows
In Market Shadows’ Virtual Value Portfolio, we booked a 92.7% profit when we sold Kelly Services Class A (KELYA) last Dec. 23, 2014, for $25.30 per share.
While not 100% perfect, our timing was very good. Today, with Kelly Services back down to $18. This time, we sold eight November 22, 2014, $20 put contracts for $2.65 per share. (Track our Virtual Put Selling Portfolio here.)
Our worst-case scenario is if KELYA is below $20 and we're forced purchase Kelly Services at a net $17.35 per share ($20 strike price – $2.65 put premium).
That potential buy would come very close to KELYA’s 52-week low of $16.83 and substantially below its March, 2014, peak price of $26.17.
The best case result will occur if KELYA recovers to $20 or better before the November 22, 2014, expiration date. If the stock is trading over the strike price of $20, the Market Shadows Virtual Put Writing Portfolio will keep 100% of the $2,120 we received upon selling the puts. We won't need to buy back any Kelly shares.
Disclosure: Long KELYA shares, short KELYA Puts in my personal account.
