Writing Out-of-the-Money Puts for Yield - February 25, 2011
One investor’s risk insurance can be another’s bread and butter. This week, we take advantage of the heavy demand for put insurance on good stocks, by taking the other side and writing high yielding out-of-the-money puts. Using our Screener (Old Version), we select underlying stocks that are likely to outperform the market, both on a fundamental and on a technical basis, and puts expiring in April, that offer a breakeven at least 7% below the stock price, and that offer a per annum yield of 20% or better.
|Company||Ticker||% Out of||% Over||Per Annum||Protection||Max. Profit|
|Deer Consumer Products||DEER||-10%||49%||76%||18%||11%|
|Skyworks Solutions Inc.||SWKS||-8%||2%||23%||13%||5%|
Deer Consumer Products, Inc. (DEER) provides quality, small hoe and kitchen electric appliances. It offers a range of products, including blenders, juicers, and soy milk makers that are designed to make lifestyles simpler and healthier. Deer's products are sold both in the China domestic market and to export markets. In the domestic market, its products target China's growing middle-class and are sold primarily under the Deer brand name, as well as under one store brand for a retailer's private-label programs. In the export market, Deer offers its products for overseas consumer products companies that sell them under brand names, including Black & Decker, Ariete, Disney, Toastmaster, Magic Bullet, Back to Basics, and Betty Crocker Kitchens, as well as store brands for retailers' private-label programs. Deer is supported by more than 103 patents, trademarks, and copyrights. www.deerinc.com
OpenTable, Inc. (OPEN) provides free, real-time online restaurant reservations for diners, and reservation and guest management solutions for restaurants. The company's Web site connects an online network formed by thousands of restaurants with diners, concierges, and administrative professionals looking for available tables that meet desired criteria for cuisine, price and location at a specified time. It also provides the "electronic reservation book", an integrated software and hardware solution that computerizes reservation management, table management, guest recognition, e-mail marketing table management, and guest management for restaurants. www.opentable.com
Potash Corporation of Saskatchewan Inc. (POT) is one of the world's largest integrated fertilizer companies, producing potash (33% of 2009 sales), phosphate (34%), and nitrogen (33%) products. Annual capacities: potash, 13.2 million tons; phosphate, 9.6 million tons of phosphate rock; 2.4 phosphoric acid; nitrogen, 3.5 million tons of ammonia. www.potashcorp.com
Radware, Ltd. (RDWR) provides application delivery and network security solutions. The company offers AppDirector Intelligent Application Delivery Controller, a data center regulator to eliminate traffic surges, server bottlenecks, connectivity disconnects, and downtime; AppXcel Application Accelerator that performs Web compression and hypertext transfer protocol multiplexing; Application Performance Monitoring, a real-time application performance indicator; AppXML, which offers XML and Web services communications; DefensePro Intrusion Prevention and Denial of Service products; Inflight; Insite ManagePro; LinkProof, a manager of Internet traffic for networks; LinkProof Branch, operating manager of multiple links across remote office links; SecureFlow; Virtual Director; and SIP Director. Radware serves banks, insurance companies, manufacturing and retail, government agencies, media companies, telecommunication carriers, and Internet and application service providers. www.radware.com
Skyworks Solutions, Inc. (SWKS) offers analog and mixed-signal semiconductors worldwide. The company provides power amplifiers and front-end solutions for cellular devices from entry level to multimedia platforms and smart phones. Its product portfolio consists of amplifiers, attenuators, detectors, diodes, directional couplers, front-end modules, hybrids, infrastructure RF subsystems, mixers/demodulators, phase shifters, PLLs/synthesizers/VCOs, power dividers/combiners, receivers, switches, and technical ceramics. Skyworks also offers MIS silicon chip capacitors, transceivers, and modulators. The company markets its products to automotive, broadband, cellular infrastructure, energy management, industrial, medical, military, and cellular handset applications. Recently, Skyworks opened an office in Singapore to support increasing demand for solutions within its linear products portfolio and to further enhance its manufacturing activities in the region. www.skyworksinc.com
At the time of this article’s writing, the author did not have positions in any of the companies mentioned.