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You create a cash-covered put when you write a put and maintain enough cash in your brokerage account to cover the entire risk of holding the position.  Readers of our Weekly Strategist Reports will know that cash covered puts and covered calls are what are called equivalent positions.  That is, for the same stock, strike and expiration, these positions require essentially the same amount of capital and offer very similar risks and rewards. However, readers will also know that cash-covered put writing is the preferable strategy when the stock is above the strike price.  This is because if the stock remains above the strike at expiration, you get to keep the entire premium.  In our screening, we have specified that we want puts on stocks with above-average appreciation potential, that are 5% out-of-the-money, that have per annum yield of 15% of higher, and a bid/ask spread no greater than 30%. Our screening returned attractive put writing candidates, among them:

Company

Stock Ticker

Stock Price

Industry

Per Annum Return

Protection

Asbury Automotive Group Inc.

ABG

     14.51

Retail Automotive

17%

17%

Cypress Semiconductor Corp

CY

     14.20

Semiconductor

18%

11%

Ford Motor Company

F

     14.27

Auto & Truck

17%

13%

International Paper Co

IP

     25.25

Paper/Forest Products

19%

11%

Southwest Airlines Co

LUV

     13.91

Air Transport

15%

8%

 

 

 

 

 

 

 

 

 

Asbury Automotive Group, Inc. (ABG) is one of the largest automotive retailers in the United States, operating 106 franchises at 81 dealership locations. It sells and services 37 different brands of American, European, and Asian automobiles in 22 metropolitan markets. www.asburyauto.com 

Cypress Semiconductor (CY) designs, manufactures, and markets a broad line of high performance digital integrated circuits used in telecom equipment, data-communications equipment, PCs, and military gear. Major products include high speed Static Random Access Memories (SRAMs), Programmable Logic Devices (PLDs), Programmable Read-Only Memories (PROMs), specialty memory, and timing devices. www.cypress.com 

Ford Motor Company (F) is the second-largest domestic automobile manufacturer; sales represented approximately 15% of U.S. car and truck market in 2009. Also it engages in vehicle leasing and rental, and the manufacturing of electronic equipment. Financial Services Group includes Ford Motor Credit and U.S. Leasing. Foreign operations accounted for about 52% of 2009 sales. www.ford.com 

International Paper Co. (IP) is a leading paper and packaging company. Products include uncoated and coated freesheet, pulp, uncoated bristols, containerboard, paperboard, and corrugated boxes. It also owns and manages 200,000 acres of forestlands in the U.S. and 250,000 acres in Brazil. www.internationalpaper.com 

Southwest Airlines (LUV) is one of the largest carriers in the United States by revenues and the largest in the world by passengers flown. LUV Specializes in low fares, no frills & short-hauls. Southwest uses point-to-point, versus more common hub-and-spoke, model for transport. www.southwest.com