Selling Z puts for income.
Zillow Group (Z) is a residential real estate information hub benefiting from a strong housing market.
The company made some mis-steps over the past year, trying to enter the home buying business and then exiting the business when it turned out to be more challenging than expected.
Still, Zillow’s online hub is very profitable and should continue to get strong traffic from realtors and potential home buyers.
The stock has pulled back to a very reasonable price compared to expected profits. And with the broad market oversold and due for a bounce, shares have a high probability of rebounding.
By selling the May $40 puts near $2.60, we’re able to collect an annualized yield near 36%, while also giving us roughly $6.70 per share in cushion between the current market price for Z and our strike price.
- Sell (to open) 2 Z May 20th $40 puts
- Limit: $2.60 or more
- The new position will represent roughly 8.5% of our model.
- 11:14 Executed
- Sold 2 Z May 20th $40 Puts @ $2.82