...got $1.75 per share for selling the Mayu $17.50 strikes when UAN was about $24........in 7 months that works out to 28 cents per month or averaged annualized yield of $3.36 per share based of $17.50 in risk which comes out to about 19% yield on annualized basis.....not a bad return given the risk level is at a price about 30% LOWER THAN ACTAUL STOCK PRICE......Maybe making 19% returns with only 67% as much risk as owning the shares outright is 'nickel and dime' to you, but I am happy to augment my profits in this manner....Your statement is generally one made by those ignorant of the possiblities of using options in one's portfolio.....The other beautiful thing about it is THAT YOU GET YOUR FUNDS IMMEDIATELY UPON SALE OF THOSE PUTS,.....not like sitting around here watching to see if the stock may or may not move higher from current $25.75 area.
Perhaps you should acuire some reading material on the workings of options and educate yourself before you spew such idiotic statements...For one to make a 19% return on UAN from these levels the shares would HAVE TO RISE TO ABOUT $29 and pay about $2 in annual divvies...
I GET THE SAME RATE OF RETURN and need only concern myself with the remote possibility the shares could be put to me at $17.50....and if that were to happen, all of the individuals currently long at $25.75 would be down $8 per shares while I still would have lost NOTHING!!!
There is no adjustment for regularly scheduled dividends/distributions (which is reasonable because people should know about them and factor that into their bid/ask offer).
However 'special dividends' which were unexpected are typically used to adjust the strike price.
Since UAN is unlikely to issue a 'special dividend' (any excess cash flow would be included in their regular scheduled distribution) this is not likely to be a consideration here.
One thing I have always wondered is how do distributions affect options prices? I.e., if you sell a Nov $25 put, and UAN distributes $.57, is there any adjustment down in the strike price? I have never heard that there is, but it seems there should be.
In fact, there cannot be a rule about $1m equity because I had significantly less than that in this account at the time I was approved for level 3 options. There may be different requirements at different brokerages.