Hi Toofuzzy, Yep, one could do that and actually make $0.05/share more than just selling the PUT, but my PUT expires before the July dividend so, for an accurate comparison, I'd only get $0.52 in dividends. However, if the price does not drop to $8 then the sell is a straight cash income.
Using the 0% AIM sell safe the price of the stock would have to go to about $9.44 to get a sell of 10 shares for a net of $9.40 per 100 shares in the AIM portfolio, assuming 100 shares in the pile. To get a decent return above the commission, one would need to invest roughly $17,000 to get a net sale of $188 before commissions.
However, if one gets the shares at $7.512, as I said, one could get a sell at $8.34, a figure I think is more likely in this very long bull run. In addition, using the extra purchased shares I'd get more dividends and a larger sale of 15 shares/100 shares of the option because I'd have 150 shares in hand.
The other thing is that the IRA that I'm doing this in is less than $20,000 so it would not make much sense to put nearly 100% of the value in just one position.
Then again one could buy now and sell a CALL, bringing in a bit of cash on top of the dividends.
My approach of selling the PUT, getting it assigned and then selling a CALL at, say $10.00, that gets assigned one would net about $2.60/share over a year's time, not counting dividends, almost 25% on an investment of about $1150. Not at all bad.
And if the CALL is not assigned one would still get about another $20/100 shares. Not all that much, true. However, if the PUT is assigned then I'd get $1.04 in dividends/share prior to the expiry of the CALL or about $156, given I'd have 150 shares.
All in all this seems reasonable for the small amount of dollars at risk.
And if I buy the extra 50% of shares at the assignment of the PUT I can AIM it like I talked about before so I'd be double dipping, using both the options and AIM.
We'll see how it goes.
Best,
Allen
