I'm Selling a Put on Molson Coors
Courtesy of Dr. Paul Price of Market Shadows
(Originally published on Sept. 16, 2013)
Market Shadows' Virtual Value Portfolio took a profit on shares of Molson Coors (TAP) in April of this year. We’ve reentered the trade through the back door today by selling a January 2015, $55 strike price put for $9.40 per share ($940 total). Note: it's a 16 month put with significant premium.
Our maximum profit will be 100% of the $940 we collected. We will keep the entire amount if TAP closes above $55 on Jan. 16, 2015. The worst-case scenario will occur if TAP fails to close above $55 on the Jan. 16, 2015 expiration date. If that occurs we will be forced to buy 100 shares of TAP for a net price of $45.60 per share (the $55 strike price minus the $940 put premium).
Analysts expect TAP to post 2014 EPS of $4.21. That gives our $45.60 break-even price a P/E just above the 10.8x projected earnings for 2014.
Check out all our closed-out and present option positions: Virtual Put Writing Portfolio
Disclosure: Short Jan. 2015 TAP $50 and $55 puts in my personal account.
