The first cash-secured put position in the CCIP was established today. This new strategy is being used in an effort to diversify the income streams in the CCIP. This particular position in HP has been established based on a few factors. After the acquisition of EDS, HP has positioned itself as a growing leader in the space of IT consulting services. In my opinion it is on its way to becoming a company on par with IBM in terms of its ability to combine hardware sales with IT services. The stock was hit recently due to a somewhat negative forecast, but I would tend to think that the company is following in Apple's footsteps by simply attempting to be more conservative when it comes to outlook. In both investing, and the consulting work that I do, I tend to believe it is better to underpromise and over deliver, than promise more than you think you can do, simply to get a short-term bounce in share price, or new business in the case of consulting. Hopefully, this position will be the first of many profitable cash-secured put positions. The performance metrics are below:
5/27/2009 -- Sold To Open 1 HPQ June $35 Put @ 1.20
The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Put Sale Profit: $120.00
Downside Coverage (Put Sold When HP@34.75): 3.45%
Possible Max Upside: 3.43%
Annualized Max Upside: 52.14%
Wednesday, May 27, 2009
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