Today I decided to open a second position in Applied Materials (AMAT). This position is a cash-secured put, which basically means that I have sold the right for someone to sell me 100 shares of AMAT at $13/share at December expiration, if the stock price is below that. The position in Applied Materials was opened as it continues to be at multi-year lows. The company has unfortunately had some negative earnings as of late, but I believe the stock has alot of upside potential in the future due to its work in the semiconductor area (it profits regardless of whose chip is used), as well as the solar area which should benefit from legislation and regulation in the next few years once all of this health care debate is over. The company yields about 2% as noted in my previous position on it. The profit/loss info is below:
11/11/2009 -- Sold To Open 1 AMAT December $13 Put @ 0.55
The important purchase metrics are below for insight into possible profit and loss (these all include commissions):
Cost Basis: N/A
Potential Gain If Called At Expiration: 4.23%
Potential Annualized Gain If Called At Expiration: 40.64%
Wednesday, November 11, 2009
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