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New trade – Ferrellgas Partners LP (FGP) put selling

FGP is one of the stocks I wish to buy and own. It is an MLP paying nice dividend and the stock is optionable. It pays 10.50% dividend as of this writing. However, the company has never increased its dividend since it started paying it in 1994. Thus I am willing to hold this stock for short period and use it for put selling and covered calls only. This stock will not be a part of my core portfolio.

So what is the game plan?

I will be selling puts against this stock as long as I get assigned. As soon as I get assigned I start selling covered calls as long as I get assigned. In the meantime I will be also collecting dividends.

I will also use this trade to learn better how to trade puts. I know this in general, but want to get better in it.

Today I sold one put contract against FGP and collected $185 premium.

01/24/2013 10:06:54 Sold 1 FGP Aug 17 2013 17.5 Put @ 1.85

If I get assigned I will have FGP for $17.5 and my cost basis will be at $15.65 (less the premium). If the stock stays above the strike price, the put expires worthless and I’ll keep the premium and repeat the process. Also if the stock manages to run up and the put becomes worthless prior to its expiration I may consider buying the put back and selling new further in time. I’ll keep posting the progress of this trade.

1 response to “New trade – Ferrellgas Partners LP (FGP) put selling”

  1. I love selling cash secured puts especially below a hard support line!

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