Jim- IMO, public companies should ALL have a policy to the effect that "the company, officers, and employees shall NOT trade in ANY short term instruments on the stock of the company (e.g. puts, calls, etc.)". Otherwise, it gives the APPEARANCE of insider trading. There is no need for anyone associated with a public company to trade options on the stock, IMO. But then, I am a stickler when it comes to ethics.
Defintiely no, Jim. Selling puts was a great way for some big caps like Microsoft, Intel and Dell to collect cash premiums in a bull market, but it proved to be a great waste of free cash flow during a bear market.
For example, Dell is still retiring puts it sold at around $44 per share while its stock remains stuck in a multi-year trading range with a hard upper limit around $30. Dell has to keep on forking over the cash difference between $44 and its applicable stock price to retire those puts as they expire.
I think selling puts is a great idea. The company essentially is putting a buyback into place, but only at low prices, and it is picking up the juice from the buyers whether the puts are exercised or not. Sounds like a great idea for a company that has cash beyond operating needs and a bright future in front of it.
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