The criteria I use include dividend yield, payout ratio, (If payout ratio is > 100% I analyze free cash flow to ensure dividend isn't endangered). I also look at Forward PE, but more importantly owner earnings. Options are also evaluated looking for a strike price with headroom for some capital gains while still generating a call premium that "covers" margin interest through options expiration.
I frequently update the spreadsheet as I find criteria that I think enhance selections. If you are using margin I'd advise you to set up an Interactive Brokers account as their margin rates are about one fourth what Schwab, TD Ameritrade and Fidelity charge. I am in the process of moving from Schwab to IB. Schwab took about 6 points out of my gains last year IB would've taken about 1.5.
Nobody puts in almost a million dollars into not just one asset class, but ONE stock, unless they are virtually 100% sure of it being a winner.
CEO's hear and see all in a company. Murray Kessler 'knows' something. He has to hold for 6 months, SEC rules. But he didn't flip options here, he didn't buy in a private placement at a special price, he didn't buy anything but plain old class A ordinary shares, and he brought them on the open market, at the going market price on Feb 18th at around $79.07/shr.
No wealthy person pays the same price as you and me unless it's a shockingly good bet.
He maybe just topping off his portfolio a bit, but with the dividend now $1.30/shr, he thought it was worth putting down almost an extra million after-tax dollars. Wow. -jeff
March $70 puts and got $1.65 for them...that is over 2% in 3 weeks, and I have $7 downside protection...At $70, I will be happy to take the shares, which I do NOT think will happen, but it is possibleto see$75 here in a few weeks...take a look at the one year chart and you will see that they generally fall to that price range during the 3 month period between divvies....CEO's are not always as smart as you think, or you could say they are dumb like a fox, trying to entice people to buy this at too high a price....anything over $75 is not worth it for the risk...........good luck to all, but my risk tolerance here is only $70 per share....if it works out I may do it every month, or if the shares get put to me, I will definitely sell covered calls for extra money...I seriously doubt the poster who bought at $79.50 area and sold the $80 calls will get called out in March
I bought this stock at 79.56 when I noticed the March 80 call option selling for 2.40. I sold the covered call immediately. If the stock goes above 80 on the day before ex div I may not get the div but I'll keep the 2.40 plus .44 diff. I also get 2.40 of downside protection plus the dividend if it doesn't exceed 80.
The last time I saw a call that lucrative was Dupont when it was at 36 or so. It went to 50 in the space of about two months.