Selling SLB puts for income.
Schlumberger Ltd. (SLB) is an oil service company providing the energy industry with equipment, technology and manpower.
While oil prices may be volatile (and could pull back from current levels), demand for drilling will continue to accelerate this year. That’s great news for SLB as its services will be in high demand.
Shares have moved higher alongside the overall energy sector. But thanks to it’s more stable business, SLB is not likely to pull back significantly from its current level.
By selling the May $40 puts near $1.40, we’re able to collect an annualized yield near 34%, while also giving us roughly $2.50 per share in cushion between the current market price for SLB and our strike price.
- Sell (to open) 2 SLB May 20th $40 puts
- Limit: $1.40 or more
- The new position will represent roughly 8.2% of our model.
- 12:16 Executed
- Sold 2 SLB May 20th $40 Puts @ $1.47