VIAC/Batman – That's what I was saying – at this price, they are going to get bought.
At $33.08, VIAC's 0.96 dividend is 3.2%, that's not bad. Still, it's only collecting $2 over 2 years and you can sell the 2024 $30 puts for $5 to net in for $25, which would make the dividend 3.8% so let's consider that $5 to be totally free money, as the worst case would be owning 500 shares for $15,000. In that case, a spread would be:
Sell 5 VIAC 2024 $30 puts for $5 ($2,500)
Buy 10 VIAC 2024 $25 calls for $11.60 ($11,600)
Sell 10 VIAC 2024 $30 calls for $8.80 ($8,800)
That's net $300 on the $5,000 spread so, rather than spending $16,500 on 500 shares of VIAC at $33, you obligate yourself to buy 500 shares at $15,300 and at $30, you make $4,700 as opposed to losing $1,500 and collecting $1,000 in dividends. Of course, the real competition would be a stock spread like:
Buy 500 VIAC at $33 ($16,500)
Sell 5 VIAC 2024 $30 calls for $8.80 ($4,400)
Sell 5 VIAC 2024 $30 puts for $5 ($2,500)
So here you have net $9,600 invested and you'll collect $1,000 in dividends and, if called away at $30 ($15,000), you will make $5,400 more. So the stock trade is better if you don't mind obligating yourself to DD at $30, which would put you in (less dividends) 1,000 shares at $24,600, which is $8,400 (25%) below the current price – as your worst case.
So both are good ways to play, more a matter of preference. For me, in a PM account, I'd rather commit to 2x the options without using the cash.
So that's 2 years of picking VIAC. They had that big spike early last year and we cashed out and then we started buying again in March – after the drop below $40. I think $30 is just silly for these guys (obviously).
January 4th, 2022 at 1:17 pm
VIAC/Batman – That's what I was saying – at this price, they are going to get bought.
So both are good ways to play, more a matter of preference. For me, in a PM account, I'd rather commit to 2x the options without using the cash.
So that's 2 years of picking VIAC. They had that big spike early last year and we cashed out and then we started buying again in March – after the drop below $40. I think $30 is just silly for these guys (obviously).