Selling puts on dividend stocks

Market's drop offers higher puts options premiums for dividend stock investors.

By Donald E. L. Johnson

Cautious Speculator

• With the Dow Jones Industrials index down about 564 points, I’m selling cash secured puts on high dividend stocks.

• When stock prices drop, puts prices rise.

• Federal Reserve Board’s Jay Powell makes market anticipate .25 to .50 point hikes in federal funds rates over the next few months.

I’m selling puts for dividends, options premiums and possible discounts on stocks with relatively strong momentum in this bear market.

1. Sold Caryle (CG) 3.17.23 $35 puts for $1.05. Net debit $33.90. ARoR 111.31%. Dividend yield on net debit if the stock is assigned would be 5.184%.

2. Sold CG 3.31.23 $30 puts for $0.33. ARoR 7.9%. Dividend yield on net debit if assigned would be 5.932%. I’m also short CG calls that expire on 3.17.23.

3. Sold DOW 3.31.23 $53 puts for $0.45. ARoR 12.167%. Dividend yield on net debit if assigned would be 5.328%.

4. Sold MRK 3.31.23 $106 puts for $0.72. ARoR 9.8%. Dividend yield on net debit if assigned would be 2.77%.

5. Sold T 3.31.23 $18 puts for $0.14. ARoR 11.325%. Dividend yield on net debit if assigned would be 6.215%.

All of these trades were done in IRAs. Therefore, the taxable equivalent yields will be higher than the yields shown above. I may do some more trades over the next few days.

I own CB and MRK and previously owned DOW and T. I am selling puts on these stocks until they are assigned. Then I will collect the dividends and sell covered calls on the stocks for enhanced options premium income.

See my home page for articles on selling puts in a bear market.

LINKs:

Home Page. See my more than 90 articles on options trading, stocks and watch lists. If you read several of these articles, you’ll learn how my strategies are meant to work. No guarantees. Links to useful web sites are on the lower right corner of the home page. Scroll down.

Follow @realDonJohnson on twitter.com and FaceBook.com.

Selling in The Money Covered Calls Can Yield Big Annual Returns on Risk. By Donald E. L. Johnson

20 Ideas for Adjusting Your Stock and Bond Portfolio, by Christina Lourosa-Ricardo.

How to Beat Inflation Tax, Bear Market Tax With Dividend Stocks, Covered Calls, Cash Secured Puts, by Donald E. L. Johnson.

Wars Breed Inflation, Rising Interest Rates, Market Turmoil, By Donald E. L. Johnson.

Ways to use StockRover.com to analyze stocks

Calls vs Puts Options: What’s the Difference?

How to trade the wheel.

A video on how to place options trades on TDAmeritrade.com’s Think or Swim trading platform.

Beware. Like all investing, trading stocks and options is risky. I’m an active private speculator who trades covered calls and sells puts on stocks for my accounts. I am not a professional analyst nor a financial advisor. I don't take and won't take responsibility for how other people trade. This article is for educational purposes only. It is not advice. The data presented looked accurate at publication time except for intra-day fluctuations, but I can’t guarantee the accuracy. Traders should do their due diligence. I reserve the right to trade any of the listed stocks and options at any time. I receive no compensation for producing this content nor for any links.