Selling ALK puts for income.
Alaska Air Group (ALK) should benefit from a strong recovery in travel this summer. Already we’ve seen positive earnings from other travel companies and management teams have been very enthusiastic about the current environment.
The broad market selloff is driving both good and bad stocks lower right now. But strong recovery plays like ALK should bounce quickly once the selling pressure lets up.
By selling the June $55 puts near $3.20, we’re able to collect an annualized yield near 40%, while also giving us roughly $0.30 per share in cushion between the current market price for ALK and our strike price. (We’re also setting aside more time for ALK to resume its uptrend)
- Sell (to open) 1 ALK June 17th $55 puts
- Limit: $3.20 or more
- The new position will represent roughly 5.9% of our model.
- 10:36 No execution
- Adjusting our limit price to $2.80
- 10:44 Executed
- Sold 1 ALK June 17th $55 Put @ $3.10