Selling MCHP puts for income.
Microchip Tech (MCHP) is an electronic device maker that has a very diversified suite of products.
The company’s underlying business should be strong as manufacturing and construction markets continue to recover from the coronavirus crisis.
At the same time, MCHP trades closely alongside Bitcoin prices because the management team has decided to hold a material portion of the company’s financial assets in Bitcoin.
With the overall market oversold and due for a bounce — and with Bitcoin prices closely correlated with the Nasdaq composite and tech stocks in general, this looks like a good time for MCHP to rebound.
By selling the June $62.50 puts near $3.40, we’re able to collect an annualized yield near 39%, while also giving us roughly $2.50 per share in cushion between the current market price for MCHP and our strike price.
- Sell (to open) 1 MCHP June 17th $62.50 put
- Limit: $3.40 or more
- The new position will represent roughly 6.7% of our model.
- 11:53 Executed
- Sold 1 MCHP June 17th $62.50 Put @ $3.60