Perform an analysis of the following whereby if one sells PUTs for November or December, what is the ROI should the equity stay above the Strike price.
The calculations should indicate a return of 6% to 10% before commissions.
November - WNR ; Strike price = 5 , premium recd. = .45
November -UYG ; Strike price = 8 , premium recd. = .50
November -TIE ; Strike price = 7.5 , premium recd. = .75
December - UYG ; Strike price = 6 , premium recd. = .60
Of course, the investor will be assigned the stock should the equity drop & close at or below the strike price. In that event, either one can hold the position at a lower cost to sell it or sell a covered call against it in future. Other option include closing the position prior to expiration.
Look at the 52 week & 2 yr & 5 yr lows on the stocks, and perform the overall analysis.
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