Thursday, June 25, 2009

Equity put options written

Two of the equity put options I wrote last month expired unexercised. I have rolled the contracts forward for another month using the same underlying stocks. Details are as follows:

Contract #1

Underlying: Hutchison Whampoa (13)
Market price: $51.50
Strike price: $50.90
Valuation date: 23 July
Maturity date: 27 July
Implied yield: 31.15%
Net purchase price if exercised: $49.58

Contract #2

Underlying: China Construction Bank (939)
Market price: $5.96
Strike price: $5.91
Valuation date: 23 July
Maturity date: 27 July
Implied yield: 39.51%
Net purchase price if exercised: $5.72

In both cases, I have been more aggressive than with last month's trades and selected strike prices which are closer to the market price on the basis that they are both stocks I would be comfortable purchasing at these prices.

If I get hit I will have effectively purchased the shares at about a 3.7% (HWL) or 4.1% (CCB) discount to the prevailing market prices.

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