By Paul Price of Market Shadows
Market Shadows sold six contracts of the June 21, 2014, $20 puts on industrial infrastructure play Aegion (AEGN) today.
We received $900 (less commission) for committing to buy 600 shares at a net cost of $20 (the strike price) less $1.50 (the put premium) = $18.50 per share, if exercised.
These options trade lightly. Be sure to use limit orders at desirable prices if you decide this trade is suitable for you.
Aegion’s 52-week range has been $17.32 to $26.09. Our break-even price is less than the price at which AEGN shares have traded during 2013.
Our best-case scenario would be 100% of the $900 received for the six contracts. We'll see that result if AEGN closes at $20 or above through the June 2014 expiration date. Our commitment is to purchase 600 shares of AEGN at a net cost of $18.50 per share if the put owner chooses to exercise the puts.
The trade will now be shown as an open position in our Virtual Put Writing Portfolio .
