Paul Price's strategy for the Virtual Put Selling Portfolio at Market Shadows: When good stocks plunge… consider selling puts.
Courtesy of Paul Price of Market Shadows
Packaged foods maker ConAgra (CAG) sold off sharply on Tuesday as estimates for FY 2014 (ends May 25, 2014) dipped to $2.22 – $2.25 from $2.30 – $2.40. (Chart from Yahoo.com)
The shares touched a new 52-week low at $28.60.
Market Shadows jumped in to sell 4 (put) contracts of the CAG Jan. 15, 2016, $30 puts for $4.60 per share for our Virtual Put Selling Portfolio.
We collected $1,840 for our committment to purchase 400 shares, if the puts are ultimately exercised. That represents our maximum profit. Break-even on this trade is at $25.40 per share ($30 strike price – $4.60 put premium).
$25.40 is lower than any ConAgra shares have actually changed hands for since the news of the Ralcorp acquisition was announced in September of 2012.
Follow this trade as an open position in Virtual Put Selling Portfolio.
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