WMT Short Put Play

I like to watch old stalwarts with high volume in boring ranges. This is why I pick symbols like GE, MSFT, etc.  Another one that's been on my radar for a couple of years is WMT.  Actually, it comes and goes on the radar screen because it is extra boring.  A recent article at the Beating Buffet Blog piqued my interest again.  Had I been keeping on an eye on WMT like I should have, I would've already made this play.  The position is a simple short put.  The P/L of a short put is shown below in case you forgot.  It is limited gain with stock risk.  Stock risk means that I am insuring the buyer of the puts from the strike down to $0. 

wmt-naked-put.png (42.59 kb)

When do I write puts as opposed to a vertical spread?  I invite you to read my article entitled Having Problems Buying?  Consider Selling Puts.  In a nutshell, I only write puts against assets that I don't mind holding.  Writing puts should feel like a win/win situation because if the asset goes up, you keep the premium (score!) and if the asset falls and you get assigned, you own the asset at the lower price + you keep the premium to lower your cost basis even more.  Win!  So bottom line, if you don't want to own it, don't sell puts.

Looking at the stock price, I'd like to write November 45's for a 0.30 credit.  They're currently trading around 0.28, so that's not a big move to get filled.  We'll see what tomorrow's session has in store.

Usual disclaimer: This is not a recommendation to anyone to buy or sell.  I'm not a professional and I don't have much sense, so following me is hazardous to your finanical health.  The point of the post is to share ideas and hopefully get some feedback so that we can all improve our understanding of the subject.