I sold a Diageo put on Monday. This is what happens when I’m at an airport and I have too much time on my hands. I blame Southwest Airlines; my delayed flight, and one too many cocktails led to this trade ;-). Diageo is a stock that I’ve wanted to own for sometime. It’s been overvalued, but the stock has experienced a price decline the past few months.
Diageo PLC is a premium alcohol company. Diageo owns the top two largest spirits brands in the world, Johnnie Walker and Smirnoff. In addition, DEO owns 20 of the world’s top 100 spirits brands. Names like Kettle One, Captain Morgan, Guinness, and Tanqueray are all in the portfolio. Heck I drink enough of these brands to support the stock valuation. I may as well start getting paid dividends to drink the stuff.
DEO stock is down 7.18% YTD. The stock offers a dividend yield of 3.05%. DEO has a 5-year CAGR, dividend growth rate of 7.9%.
I sold a cash secured put on DEO. Here are the details:
- Contract Length: 53 Days
- Opening Fees :$1.09
- Strike Price: $100
- Premium: $2.05
- Potential Annualized Rate of Return: 14.34%
- Status (Open)
- Potential Profit: $203.91
My break-even price is $97.95. If DEO stock falls below this price, I’ll happily add 100 shares to my portfolio If the stock doesn’t fall below this price, I’ll likely sell another put.