I was looking at a 2 week chart and realized, as I mentioned on another thread, we have had around a 10% drop in share price. It seems to be the ussual drop between dividend times and it seems this would be a great time for some calls. So I bought some August calls.
I noticed one of our former posters feels we will be back to around mid $7's very soon.
Anyone else think that options should be a good play here baring any un-wanted negative news?
I've looked at options on a number of REITS I own and I haven't done anything. It's a different kind of investing. It can be wildly speculative or rather conservative depending on how you play it. I'm not looking for even more speculation, just holding RSO with its huge divident is enough on that score.
Here's a farily conservative strategy that is tempting for me. The Feb 7 call option strike price of 7.50 traded at .14 today actually up $.04.
If you sell this out of the money option against shares you own, it's a no lose situation. You just make money. The only downside is you could possibly make less money, but you MAKR money no matter what. The option has less than 30 days to expire and if you got .14 for it, that's a 2% return in less than a month = annual rate of 24%!). If the stock reaches 7.50 in less than the 30 days, you make the .14 plus .65 on the stock or .79/6.85 = 11.5% in less than 30 days. The only regret you would have if the stock were to make it above 7.64 (7.50 + .14) and the way the market is behaving, it's dicey. Of course, RSO could have some great news with their earnings and the stock rises above 7.64. But you still made a hell of a return. Pretty tempting. I'm thinking about it with some of my shares.
I sold 30 covered Jan. Calls on the divi run up for .15 and was amazed when they were not called away when the stock got to 7.65. Got the divi now and after the last 3 days drop they are safe. Picked up 50 Feb. calls for an average of .15 and am hoping for a mild run up into earnings to make a double on them. I think until we establish a floor of at least 7.50 covered calls will be a solid strategy. The only addition I would make is to wait a few days and see if we get upward movement to get more value from the calls.