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Pick Up This Dollar Bill Sitting In Sand

in money •  27 days ago

"Gorilla Glass"

The special thin glass material made specifically for the legendary iPhone in 2007 by Corning (GLW).

The company is still minting cash producing this amazing product which is now used in phones, tablets, tv, etc.

With shares trading at a reasonable price, it is time to take advantage and sell puts for income.

Corning currently has over $10 billion in sales which grew 10% last year. The company has an attractive 12% profit margin.

With those margins, the company has plenty of cash left over to reward shareholders…

Put selling is best done on great businesses trading at good prices. Here Corning is trading at a low EV/EBITDA (a less manipulated financial figure that Price to Earnings) of 12.4.

The last recommend trade in June closed for a 3.1% gain. I have been waiting to see how the stock would hold up after its recent increase. Corning is above its 200 day moving average and holding up well.

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The 200 day offers stability and potential support so it is a good time to sell puts.

Trade details:

Sell the October 19, $33 puts on Corning for $0.78 using a limit order. To agree to buy at a discount you are paid 2.4% upfront.

At expiration if shares are above $33: keep the $0.78 free and clear for a 16.9% annualized return.

At expiration if shares are below $33: you will buy shares at about 4% discount to recent prices and have the opportunity to collect additional cash through covered calls.

For protection use a stop loss at $29 which is just below the 200 day moving average.

This is a great business to own for a long time and selling puts allows us to get paid to wait for the right price to buy the shares.

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.

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20+ year investor here that just learned options trading, well very light version... I have only done buy to open and sell to close for some profits, time to look into puts! Looking forward to seeing more of your moves in the future!