Monday, August 29, 2011

MMM - Skimming Some Gains

The last 3M post discussed trying to skimming a little profit by selling $80 puts just a few days before expiration.  That post also "warned" that this trade meant that an investor had to be willing to "risk" being put the stock if it fell quickly.   Well it did fall,  and CCI is the proud owner of one lot  of MMM at a price around $79.50.

With MMM bouncing back toward $82 today, CCI sold one lot of Sept $82.50 covered calls against these shares today for $1.65 after commissions
  • If the stock continues to rise, we will get called away at $82.50.  We will take our 5+% monthly profit and go home. ($3 in capital appreciation,  $1.65 in option premium).
  • If the stock pulls back this option premium will lower the Break Even Point to under $78, and we will sit and wait to see what comes next.

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