It’s working for me.
I knew the Brent 1/20/16 futures were in play with huge naked shorts out there in the energy sector, a put-to-short ratio over 3 to 1. I saw an opportunity here in sound companies like SPN IMHO.
Here’s what I did:
A. On 12/18/15 I invested $6,480 and bought 500 shares @ $12.96 … My objective: future dividend and call income
B. On 12/18/15 sold 5 2/19/16 $15.00 (Covered) Calls at $4.25… Net proceeds of $2,110
C. On 12/18/15 bought 30 2/19/16 $10.00 Puts at $.15 costing $460
D. On 1/20/16 sold my 30 2/19/16 $10.00 Puts at $4.50 Net proceeds of $13,490 and then
E. On 1/20/16 bought an addition 1500 shares of SPN at $8.45 cost of $12,685.
Now own 2,000 shares with under $4,000 net-out-of-pocket or risk exposure: annual dividend at $640 16% … which I think will hold based on current put/call ratios and insider buying.
Not writing (selling) any calls see a nice upswing in the next few quarters. I would still be buying here although the call and put spreads have severely diminished.