Collect Cash with Put Selling (GIS)

in #money3 years ago

At the end of long bull markets invest in the strongest companies.

There are companies that can gain in value even during the worst of stock market declines. These include businesses like retail behemoth Walmart (WMT), fast-food giant McDonald's (MCD), self-storage firm Public Storage (PSA), grocery chain Kroger (KR), toymaker Hasbro (HAS), paint maker Sherwin-Williams (SHW), garbage collector Waste Management (WM), and banking firm Wells Fargo (WFC).

These stable names are great for trading for income by selling options. To profit from selling a put option investors make money if a stock rises, holds steady or declines a little.

Today's stable name is $32 billion packaged-food maker General Mills (GIS). Profit from a large assortment of great brands including Cheerios (cereal), Betty Crocker (baking), Pillsbury (the "Doughboy"), Nature Valley (granola bars), Yoplait (yogurt), Old El Paso (Mexican-inspired food), Häagen-Dazs (ice cream), and Blue Buffalo (pet food).

General Mills continues to generate about $16.6 billion in sales which grew 8% over the last 12 months. General Mills also earns fantastic profits of 11.5% and growing earnings per share. Plus shareholders are rewarded with a 3.7% dividend.

Shares have had a rough 2 year period but with the stock price above the 200 DMA (daily moving average) the stock is in a strong uptrend that should continue.


Trade details:

Sell to open, the July 19, 2019, $52.50 puts on General Mills for $1.80 using a limit order. Earn a 3.4% payment for agreeing to purchase shares at a slight discount to current trading prices.

At expiration if shares are above $52.50: put sellers will keep the $1.80 for a 21.2% annualized return.

At expiration if shares are below $52.50: put sellers will buy shares at a cost basis of $50.7 per share. Then you can collect potential dividends and sell call options for more income.

Use stop loss at $45.50. Shares will have fallen below its 200-DMA. So it is best to protect capital and take a small loss.

Profit today by selling put options.

Disclosure: I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article. The information provided should NOT be considered advice. The topics discussed are risky and have the potential to lose a substantial amount. I am not an investment professional and therefore do not offer individual financial advice. Please do your own research before investing.


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