No. of Recommendations: 1

I sold Dec 20 2019 $60.00 Puts on 5/23 for $2.15 (think of it as about 2/3 of VLO's annual dividend, tax differences aside). These puts are now about 20% in the green.

One reason I chose such a low out-of-the-money strike price was that the general market was headed down; another was that I already had a decent VLO position at an average cost of about $66.00.

Whenever I sell a cash-secured put (or a covered call), I always make sure that I am OK with either outcome: either I get a stock at the price I want to pay, or I collect a nice option premium and rinse/repeat (if conditions are right).

I am considering additional VLO puts if the stock price drops again. Keep in mind that VLO, by the nature of the sector in which it operates is cyclical, due to crack spreads and the general oil/energy markets. My first VLO position was at $50.17 in rose up above $120, then fell back....all the while paying an ever increasing dividend (3-year dividend growth rate is 23+%)

Oh! I should mention that I generally cover option sales at the 85% profit level, depending upon time left until expiration.

BL and MFPP Home Fool

(long VLO; sold VLO Puts)
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