Let’s get right to it, shall we? The mystery trade is for CSX. Below is a screen shot of the scan from CallWriter’s Global Select Naked Put list (NOV 42 Put, premium 1.05, return 2.56%):
As of Friday’s close, a 42 Put is giving 1.05 in premium, reducing a stock entry to 40.95 if called. If we don’t get called the return is 2.56% and we just try again next month. Remember, we must not be afraid to be assigned this stock. Here are some fundamental reasons for wanting to own it (from Morningstar):
Granted, this company is no Apple, Inc., but any company that has paid dividends at a fairly high rate since 1922 is a good solid company, and that’s what I’m aiming at for my Covered Calls.
The only question left is “when is the right time to enter”. The cart below shows that our 40.95 cost basis is just under major support at 41. Providing the stock doesn’t take a huge loss today (last Friday the all railroads took a 3-6% hit), it would appear that our cost basis is a bottom.
I do have a bit of a concern with what appears to be a head and shoulders pattern (yeah, a little crooked), so I will not enter until after the trend for today is clear (never enter/close at the open unless it’s an emergency). Patience is very important.
I’ll let you know what my decision will be. You never know, I might take a pass on this depending on today’s action.
Thanks for reading and your comments/suggestions/corrections are always welcome.
- Jeff
