Wednesday, September 14, 2011

MMM - Bought back Sept puts

With MMM trading just above the strike price of the lot of Sept. $77.50 puts sold a few weeks ago, CCI closed out this position this morning for a very modest .3% gain.

At the time of this transaction, it was basically 50/50 as to how this option will end-up on Friday.  While there was still 1+% of premium value in this option, there did not see to be much of a  margin of safety if this stock or the market fell into the weekend.  Additionally, the Sept $82.50 covered call on the other side of this trade is highly probable to expire worthless on Friday.  So overall the portfolio will have only scratched out a small .3% gain on this "put side" of the trade and 2% with the "covered call side" of the trade.  Winning the full amounts on both sides of the trade would be ideal, but grinding out this type of small gain is consistent with the objective of this conservative position, and now there is less risk on the table.

More generally, fundamentally nothing really seems to have changed about the company.  However, my view of the MMM chart shows a the pennant/wedge signaling some sort of break up or down is coming.  With solid support around $77, my guess would be for it break up.  Hence we will continue to hold the one lot of long shares currently in the portfolio and see what move Mr. Market gives us next.  

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