Given the stock has fallen from near $100 to $80, it seems like a good time to consider re-establishing a trading a position in this stock. Given option volatility remains elevated, and we are comfortable owning the stock at this level, today I sold one lot of Aug $80 puts for $.55 after commission. Two scenarios
- If MMM stays over $80 this week, CCI will make .6 % in three days and reconsider entering a trade in the stock. A very modest gain, but these days that small amount of income seems like a lot. If you believe standard option math theory this scenario is 2:1 more likely to happen than the next scenario. However, an investor should not enter this trade if they are not comfortably owning this stock.
- MMM falls below $80 this week. CCI will own one lot at about $79.45 and look to trade around that position. Likely by selling both a put to potentially acquire a second lot at a lower price and also sell a covered call against this lot. These two option sales would generate a decent amount of income supported by the blue-chip nature of the company,