Selling Put on Soy Producer Bunge in our Virtual Put Selling Portfolio
By Paul Price
Bunge (BG) is the world’s largest soybean processor. The stock peaked earlier this year at $80.99 and is expected to earn $7.30 per share in 2013. After Monday’s steep selloff, BG is now trading for $66.74.
We’ve sold 1 Jan. 18, 2014 $70 put for Market Shadows' Virtual Put Selling Portfolio at the current bid price of $7.40 per share. That credits our account with $740 while committing us to buy 100 shares of Bunge, if exercised, at a net cost of $62.60 per share ($70 – $7.40 per share).
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The ‘if put’ price would be close to the absolute bottoms hit during panic periods in 2011 and 2012. It represents less than 8.6x projected earnings. Bunge’s yield at that $62.60 net price would be 1.73%.
Bunge has touched calendar year highs between $74 – $135 during each of the past eight years, including 2013. Revenues, cash flow, earnings, dividends and book value are all projected to hit record levels by year-end.
